CFTC'S DAVIS URGES CAUTION ON OFF-EXCHANGE ISSUE
Regulations governing hedging and risk
management should be revised and development of new futures
instruments cautiously monitored in dealing with the growth of
off-exchange futures instruments, Robert Davis, a commissioner
on the Commodity Futures Trading Commission, CFTC, said.
    Davis told the Chicago chapter of the Futures Industry
Association Commodity Research Division last night "there is no
cause for undue alarm" in the growth of off-exchange
instruments.
    However, he said, the CFTC "must clarify jurisdictional and
regulatory issues" by maintaining the safeguards intended by
commodity regulations while encouraging "the further
development of competitive markets."
    "There is not a single off-exchange issue, there cannot be
one policy approach, and to the extent that problems exist,
there cannot be one solution," Davis said.
    The development of off-exchange instruments with futures
contract characteristics has become of increasing concern to
federal regulators who are trying to define what issues are
covered under existing regulations and where new regulations
are needed to protect private investment.
    Davis said the CFTC should step up enforcement where
off-exchange instruments are intended to compete with
exchange-traded issues, correct "regulatory inflexibility"
which may force new instruments off exchange, and "delineate
and separate those harmful off-exchange developments from the
many that are not."
    "We cannot ignore that some of the growth of off-exchange
trading represents a desirable further development of financial
forward contracts that complement, rather than compete with,
the relatively new financial futures contracts," Davis said.
    He said a CFTC task force is continuing its investigation
of the off-exchange issue.
 Reuter
