Global Task Force on Financial Integrity
In February 1995 Barings PLC, an international financial institution with a 200-year history, collapsed as a result of substantial trading losses incurred by a Barings employee. These losses were caused in large part by a lack of adequate internal controls over the employee's proprietary trading activities, including those conducted in exchange-traded futures and options.

The Barings failure did not result in losses to other market participants and, in many respects, the situation underscored the fundamental strength and soundness of the global futures and options regulatory, trading and clearing systems. Nevertheless, the events surrounding the Barings failure prompted market participants to consider certain national and cross-border issues related to the structure and operation of the international markets for exchange-traded and/or cleared futures and options. The most significant of these issues included the mechanisms that exist for the protection of participants' assets, the internal controls and risk management procedures employed by exchanges/clearinghouses, brokers/intermediaries and customers, and the communication of information regarding the activities of market participants by exchanges/clearinghouses and regulatory authorities.

The Futures Industry Association Global Task Force on Financial Integrity was organized in March 1995 to address these issues. The Task Force includes representatives of major international exchanges/clearinghouses, brokers/intermediaries (including futures commission merchants and other brokers), and customers from 17 jurisdictions. In June 1995, the Task Force released a comprehensive set of recommendations to improve the financial integrity of the international futures industry.

Financial Integrity Recommendations: For Futures and Options Markets and Market Participants (PDF)

Financial Integrity Recommendations: Appendix (PDF)

For printer-friendly versions of individual sections of the publication, link to the following:

In a parallel action, regulatory agencies from 14 jurisdictions signed a declaration of cooperation and supervision covering international futures markets on March 15, 1996. The authorities also welcomed a complementary memorandum of understanding and agreement by 49 futures exchanges and clearing organizations. Both documents constitute multilateral mechanisms for the sharing of information on a bilateral basis among market authorities consistent with their legal and contractual obligations.

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    Special thanks to participating firms:

    Amsterdam Futures
    M.P.A. De Vries
    W. Van Stappen
    Board of Trade Clearing Corporation
    Dennis A. Dutterer, John C. Hiatt
    Cargill Investor Services, Inc.
    Hal T. Hansen
    Chase Manhattan Futures Corp.
    Janice C. Abrahamson
    Chicago Board of Trade
    Carol A. Burke, Ralph I. Goldenberg, Kathryn M. Trkla
    Chicago Mercantile Exchange
    Eileen T. Flaherty, Kathryn J. Meyer
    Coffee, Sugar & Cocoa Exchange, Inc.
    Audrey Hirschfeld
    Dean Witter Reynolds
    Laurence E. Mollner
    Deutsche Borse AG
    Michael Hofmann, Anselm Jumpertz
    Fimat USA, LLC
    Gary Alan DeWaal
    FIA Board of Directors
    Robert E. Zellner
    Futures Industry Association
    Mary Ann Burns, John M. Damgard, Barbara Wierzynski
    Futures Industry Institute
    Paula A. Tosini
    Futures and Options Association
    Anthony Belchambers
    General Motors Investment Management Corporation
    William P. Miller II
    Harris Futures Corporation
    Jennifer S. Johnson
    Harvard Management Company, Inc.
    Michael Pradko, Verne O. Sedlacek
    Hong Kong Futures Exchange
    Ivers W. Riley
    Italian Stock Exchange Council
    Luigi Ruggerone
    John W. Henry & Co., Inc.
    Peter F. Karpen
    Lehman Brothers Inc.
    Ronald H. Filler, Charles P. Nastro
    London Clearing House
    David M. Hardy, Andrew Lamb
    London Commodity Exchange
    Michael N. Jenkins
    Daniel Hodson, Nick Carew Hunt, Richard Pratt
    London Metal Exchange
    Neil D. Banks
    Managed Futures Association
    L. Carlton Anderson, Clyde F. Ensslin
    MATIF, Louis-Armand de Rouge
    Michel Favreau, Patrick Stephan
    Merrill Lynch Futures Inc.
    William T. Maitland
    Merrill Lynch Japan Inc.
    David J. Semaya
    Montreal Exchange
    John S. Ballard
    Morgan Stanley & Co.
    John P. Davidson III
    National Futures Association
    Daniel A. Driscoll
    New York Mercantile Exchange
    Bernard J. Purta, Neal L. Wolkoff
    Northern Futures Corporation
    David R. Ganis
    OMLX, The London Securities and Derivatives Exchange
    Derek Oliver
    OM Group
    Hans Berggren
    Refco Commodities Services GMBH
    Elizabeth Ocker
    Refco Overseas Ltd.
    Richard A. Reinert
    Sakura Dellsher, Inc.
    Karen M. Dorff, Leo Melamed
    Salomon Brothers Inc.
    Marcy Engel
    Smith Barney Inc.
    Steven Keltz
    Sydney Futures Exchange
    Terrence F. Martell
    Counsel to the Task Force, Sullivan & Cromwell
    Kenneth M. Raisler, David J. Gilberg, William Y. Chua