Industry Groups: Reg AT Too Prescriptive

FIA and FIA PTG oppose overly prescriptive regulation of automated trading
Washington, D.C. —Today, in response to the Commodity Futures Trading Commission’s (CFTC) supplemental notice of proposed rulemaking regarding Regulation AT, FIA and the FIA Principal Traders Group (FIA PTG) submitted comments opposing overly prescriptive regulation of automated trading.

“Proposed Regulation AT is too prescriptive and is neither necessary nor appropriate to address the risks of automated trading,” said Walt Lukken, president and CEO of FIA.  “The industry has worked together for years developing the best practices and comprehensive risk management systems in place today. If the Commission still finds it necessary to move forward with regulations, we recommend replacing the current proposal with a principles-based approach that recognizes the importance of risk controls in protecting our markets while encouraging market innovation by being flexible enough to adapt to the pace of technological advances.”

The comments detail the principles that should form the basis of any automated trading regulation, and include recommendations on pre-trade and other risk controls, testing, order cancellation tools and unique identifiers.

“These principles are widely in operation in the industry,” Lukken said. “Importantly, they provide meaningful and appropriate risk management that is capable of evolving with market technology.”

Additionally, the letter continues to oppose access to proprietary source code used to operate automated trading systems without the protections offered by subpoena. “Source code deserves the same protections under the law as any other form of intellectual property,” Lukken said, reiterating previous comments.

The letter represents FIA and FIA PTG’s third comment letter on this proposed regulation. Additionally, FIA and FIA PTG provided a detailed response to the Commission’s 2013 concept release on risk controls and system safeguards for automated trading environments. These comments build upon industry-wide surveys of risk management procedures and six papers on best practices and guidelines for automated trading systems. All of this work can be found here.

The full comment letter is available here.


About FIA

FIA is the leading global trade organization for the futures, options and centrally cleared derivatives markets, with offices in London, Singapore and Washington, D.C. FIA’s membership includes clearing firms, exchanges, clearinghouses, trading firms and commodities specialists from more than 48 countries as well as technology vendors, lawyers and other professionals serving the industry. FIA’s mission is to support open, transparent and competitive markets, protect and enhance the integrity of the financial system, and promote high standards of professional conduct. As the principal members of derivatives clearinghouses worldwide, FIA’s member firms play a critical role in the reduction of systemic risk in global financial markets.

For more information, contact Heather Vaughan at +1 202.466.5460.


FIA PTG is an association of more than 20 firms that trade their own capital on exchanges in futures, options and equities markets worldwide. FIA PTG members engage in manual, automated, and hybrid methods of trading, and they are active in a wide variety of asset classes, including equities, fixed income, foreign exchange and commodities. FIA PTG member firms serve as a critical source of liquidity, allowing those who use the markets, including individual investors, to manage their risks and invest effectively. FIA PTG advocates for open access to markets, transparency, and data-driven policy.

For more information, contact Heather Vaughan at +1 202.466.5460.

Related articles