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Analysis

September 21, 2011

Summary of the Rule on Prohibition of Market Manipulation

WHAT’S THE RULE? The Commodity Futures Trading Commission on July 14 published a final rule on the prohibition of market manipulation, which gives the agency  new powers to go after fraud.

WHY IS IT IMPORTANT? The rule would help prevent market abuses that contributed to financial crisis, which led to unprecedented bailout of big banks, massive job loss, and an economy that neared collapse.

WHAT DID BETTER MARKETS ARGUE?  We said the agency’s proposed rule was too broad and needed to be more specific so that it would be aligned with long-standing SEC rules. In particular, Better Markets urged the agency explicitly include manipulation of margining because of the great potential for abuse to occur during such transactions.

WHAT DID THE AGENCY DO? The agency in the final rule declined to specify margining. The CFTC noted, however, that it plans to interpret the rule in a very broad scope.

Proposed rule

Final rule

Summaries of Rules
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