The US Commodity Futures Trading Commission (CFTC) has adopted on Tuesday changes to the local regulation, which aim to enhance the regulatory regime for automated trading, to increase transparency and to reduce potential risks arising from algorithmic trading activity.
The Regulation Automated Trading (AT) represents a series of rules, risk controls and measures and appeared in response to the evolution of automated trading on U.S. designated contract markets (DCMs). It requires the implementation of risk controls such as maximum order message and maximum order size parameters, and the establishment of standards for the development, testing, and monitoring of ATSs, among other requirements.
AT Persons will be required to submit regular reports on their risk controls and maintain records of algorithmic trading procedures. They will also have to use self-trade prevention tools.
“In addition, the proposed rules are designed to increase transparency around DCM electronic trade matching platforms, by requiring DCMs to publish a description of rules or known attributes of the trade matching platform that materially affect factors such as the time, price or quantity of execution of market participant orders, the ability to cancel or modify orders, and the transmission of market data and order or trade confirmations to market participants,” the CFTC said in a statement.
The rules apply to (a) market participants using algorithmic trading systems (ATSs), who are defined as “AT Persons” in the rulemaking, (b) clearing member futures commission merchants (FCMs) with respect to their AT Person customers, and (c) DCMs executing AT Person orders.
In addition, the CFTC proposes AT Persons should become members of a registered futures association, with its own rules and requirements. Moreover, certain proprietary traders, especially those engaged in algorithmic trading through direct electronic access to a DCM, should get registered with the CFTC, if they are currently not.
Source: forexbrokerz.com/news/us-cftc-approves-tighter-rules-for-automated-trading
The Regulation Automated Trading (AT) represents a series of rules, risk controls and measures and appeared in response to the evolution of automated trading on U.S. designated contract markets (DCMs). It requires the implementation of risk controls such as maximum order message and maximum order size parameters, and the establishment of standards for the development, testing, and monitoring of ATSs, among other requirements.
AT Persons will be required to submit regular reports on their risk controls and maintain records of algorithmic trading procedures. They will also have to use self-trade prevention tools.
“In addition, the proposed rules are designed to increase transparency around DCM electronic trade matching platforms, by requiring DCMs to publish a description of rules or known attributes of the trade matching platform that materially affect factors such as the time, price or quantity of execution of market participant orders, the ability to cancel or modify orders, and the transmission of market data and order or trade confirmations to market participants,” the CFTC said in a statement.
The rules apply to (a) market participants using algorithmic trading systems (ATSs), who are defined as “AT Persons” in the rulemaking, (b) clearing member futures commission merchants (FCMs) with respect to their AT Person customers, and (c) DCMs executing AT Person orders.
In addition, the CFTC proposes AT Persons should become members of a registered futures association, with its own rules and requirements. Moreover, certain proprietary traders, especially those engaged in algorithmic trading through direct electronic access to a DCM, should get registered with the CFTC, if they are currently not.
Source: forexbrokerz.com/news/us-cftc-approves-tighter-rules-for-automated-trading
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