CME POSTPONES RULING ON DUAL TRADING PETITION
Chicago Mercantile Exchange, CME,
directors have postponed action on a membership petition
calling for a ban on dual trading, CME Chairman Jack Sandner
told Reuters.
    Consideration of the petition was scheduled for a regular
board meeting today, but directors first wanted the opinions of
a special committee that has been studying trading conditions
in the Standard and Poor's 500 futures pit for the last six
months.
    "We didn't want to preempt the committee," Sandner said.
    Instead, Sandner said the board will wait for the findings
of the special S and P committee, which is considering some
type of restriction on dual trading in S and P 500 futures.
    Dual trading is the legal practice in which an exchange
member can execute customer orders as well as trade for his own
account. Critics maintain the practice provides an opportunity
for traders to "front-run" or trade their own accounts at more
favorable prices before customer orders are executed. Sandner
said he expects the special committee to report its findings
late next week and the board to act when those findings are
presented.
    In response to reports that the CME board is opposed to a
ban on dual trading, Sandner pointed out that the board already
unanimously approved a partial ban on dual trading in S and P
500 futures at a prior meeting.
    The change was withheld, however, at the request of the
special committee after a study was released and the committee
felt the issue should be addressed more comprehensively,
Sandner said.
    Sandner said that he personally had no aversion to a ban on
dual trading and "the leadership (of the CME) is not opposed to
a ban on dual trading."
    Last week, CME special counsel Leo Melamed said the special
study committee is considering changes only for S and P 500
futures and options on futures.
    In addition to the dual trading issue, the committee is
also expected to make recommendations on the possibility for
electronic order entry and execution for S and P 500 futures
and rule changes to alleviate crowded conditions in the S and P
trading pit, Melamed said.
    Melamed said at the time that in matters where a special
committee is appointed, recommendations from the committee are
usually approved by the exchange board of directors.
 Reuter
