The U.S. Commodity Futures Trading Commission is currently seeking public comment on further proposals to curb high-speed derivatives trading.
The watchdog has compiled a list of 100 questions for market participants addressing all aspects of trading, from pre- and post-trade risk controls, to the design, testing and supervision of automated trading systems, Finextra reported.
In the report, the Commission is said that this list of questions or its own version of a “Concept Release” is driven by U.S. derivatives markets’ transition from human-centered trading venues to highly automated and interconnected trading environments.
The Securities and Exchange Commission released its own Concept Release back on January 14, 2010, to address market structure concerns, which included automated trading and high-speed trading.
“The operational centers of modern markets now reside in a combination of ATSs and electronic trading platforms that can execute repetitive tasks at speeds orders of magnitude greater than any human equivalent,” the CFTC said in a statement to Finextra. “Traditional risk controls and safeguards that relied on human judgment and speeds must be re-evaluated in light of new market structures.”
The document is being issued in the wake of a series of market mishaps and technical glitches that have cast doubt on the ability of financial markets to keep pace with the speed of modern trading technology.
CFTC Commissioner Bart Chilton said: “In general, those involved in financial markets seem to have blindly accepted that technology is almost always a good thing…But it doesn’t work well enough if we continue to see aberrations.”
The regulatory body has scheduled an advisory committee meeting for later this week that will discuss to chief issues raised by the document.
