WINNIPEG — The Canadian Grain Commission has launched its own review of how the Winnipeg Commodity Exchange handled problems surrounding its June canola contract earlier this year.
In a release earlier this month, commission officials said a team of specialists would be examining the exchange’s actions leading up to the declaration of an emergency, as well as what it has done since.
The commodity exchange declared a market emergency and closed trade in the June canola contract ahead of schedule, after months of wildly fluctuating prices.
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Price manipulation?
Exchange officials launched an investigation into the market participants to determine if there was an attempt to manipulate prices. It also began a review of how the contract is structured.
Four months later, the Canadian Grain Commission has introduced its own team to conduct a review of how the exchange handled the crisis.
The team, headed by a former chair of the United States Commodity Futures Trading Commission, is expected to consider issues such as conflict of interest, the procedures followed and treatment of the participants at each stage of the process.
Commission spokesperson Paul Graham said the review is not being launched because commissioners suspect anything untoward occurred as part of the WCE’s handling of the affair.
Reviews standard
Because the commission is responsible for overseeing the Grain Futures Act, “we felt it appropriate to do a post-mortem,” Graham said. Such reviews are standard in other countries when unusual intervention in the marketplace is deemed necessary.
But WCE president Fred Siemens said timing of the review, so close to the conclusion of the WCE’s internal investigation, is “curious.”
“I’ve expressed my concern to them over the timing of it,” he said. Siemens said he doesn’t quarrel with the commission’s right to examine the WCE’s actions. “They have the mandate to provide assurances that the exchange is properly fulfilling its mandate.”
But “I don’t think it’s necessary because in the end I’m confident we’ll get an A-plus,” he said.
The exchange hopes to release the findings of its investigation within the next month. The commission’s report is due by the end of this year.
