WINNIPEG – The Winnipeg Commodity Exchange has wrapped up its investigation into grain companies’ roles in the forced emergency liquidation of the June 1994 canola futures contract.
The exchange reprimanded Continental Grain (Canada) Ltd. for not complying with an order to liquidate its short positions in the contract. The company has agreed to pay $25,000 toward the costs of the investigation.
The exchange finished its examination of the long position holders (buyers) in the contract in late May, which resulted in XCAN Grain Pool making a “no admission, no denial” payment of $250,000 after charges that it broke exchange bylaws.
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After more than a year of gathering data, meeting with market participants and negotiating settlements, Fred Siemens couldn’t think of a better way to start the new year.
“There is nobody more relieved than I am,” the WCE president said with a smile. “We have so many things that we’re waiting and wanting to do, and we are doing,” he said.
Revision of bylaws that deal with disciplining market participants is one of the first things the exchange will be doing in the new year.
New territory
“We essentially … didn’t have any experience in this,” said Siemens, explaining one of the reasons the investigation took so long. “Our bylaws and disciplinary system hadn’t been tested to this extent.”
The bylaws in question were developed about 20 years ago, Siemens guessed. “Our disciplinary process, to be kind, is outdated … life has moved on since our bylaws were written, and we have to move with it.”
The exchange has enlisted the help of an expert in the field of discipline: Harold Giles, former chief judge of Manitoba Provincial Court.
“We have to make sure that we have a system that can recognize that there will be transgressions, there will be disagreements, and in a worst-case scenario, there will be outright violations,” Siemens said.
