CFTC set to hold public meeting on HFT – Will America remain prop-shop friendly?


The US Commodity Futures Trading Commission (CFTC) yesterday announced that its Technology Advisory Committee is scheduled to meet on June 3, along with subcommittees on Automated and High Frequency Trading (HFT), in order to make further inroads into government-level discussion on various matters, including HFT itself, the CFTC’s surveillance program, and the ongoing implementation of rulings regarding swap execution facilities.

The debate on HFT and automated trading has taken hold in most jurisdictions, but has been handled in very different ways, with the European Commission having decided a year ago that its aim was clearly to purge the entire practice of algorithmic trading and HFT from its shores.

North American regulators, who often lead the way in terms of setting forth comprehensive structures within which trading regulations can be set forth, have taken a far more pragmatic approach, perhaps realizing that HFT and algorithmic trading are core aspects of Chicago and New York’s institutional trading methodologies, and that the vast majority of highly advanced, low latency network infrastructure lies within the United States.

Therefore, instead of invoking the Volcker rule which states within the Dodd-Frank Act that proprietary trading should cease across all asset classes and trading firms, the US authorities only applied it to the banking sector, leaving Chicago’s numerous proprietary trading desks to continue unhindered.

Just two days ago, LeapRate reported that CME Group Executive Chairman and President Terry Duffy is due to appear in front of the US Senate Committee on Agriculture, in order to assist in defining methods of ruling HFT in the futures markets, demonstrating that the business-friendly United States seeks the foresight and experience of senior industry professionals in its definition of rulings.

The meeting on June 3 will take place from 10:00AM to 5:00PM at the CFTC Headquarters Conference Center, 1155 21st Street, NW, Washington, DC 20581, and a complete agenda will be available from the CFTC prior to the meeting.

The TAC meeting will be open to the public with seating on a first-come, first-served basis. Audio of the meeting will be available via a listen-only conference call. After the meeting, a transcript of the meeting will be published through a link on the CFTC’s website.

Most certainly following last year’s rapid approval by the CFTC of a vast array of swap execution facilities (SEFs), the operation of which is now underway, there is likely to be much to discuss as to the progress of such entities with regard to the FX asset class, as they are subject to monitoring by the CFTC in order to update their current temporary SEF status to permanent SEF status, signalling the full-time implementation, and the notion that this methodology is here to stay.

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CFTC set to hold public meeting on HFT - Will America remain prop-shop friendly?


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