United States: Cadwalader Attorneys Summarize Supplemental Reg. AT Proposal
Last Updated: November 14 2016

Cadwalader attorneys summarized key aspects of a supplemental proposal on automated trading that the CFTC approved by a two-to-one vote on November 4, 2016. The supplemental proposal amends Reg. AT which was proposed originally in 2015.

In a memorandum titled: "CFTC Approves Supplemental Proposal for Proposed Regulation AT" Cadwalader attorneys covered the following key amendments: 1) a new quantitative threshold to determine whether a person must register under the new category of floor trader, and whether a Commission registrant is an "AT Person"; 2) the ability for CFTC staff to obtain source code through issuance of a subpoena or special call, either of which must be approved by a Commission vote; 3) the removal of the requirement for futures commission merchants and AT Persons to file annual reports with a DCM regarding their risk control framework; 3) the change in pre-trade risk controls from a three-tier to a two-tier structure; and 4) the expansion of the scope of pre-trade risk controls to all electronic trading (as opposed to Proposed Reg AT, which would have limited the pre-trade risk controls to the algorithmic trading of AT Persons).     

The attorneys noted that a 60-day comment period for the Reg. AT Supplemental Proposal will begin on the date of the proposal's publication in the Federal Register. The attorneys emphasized that whatever appears in Proposed Reg. AT that is not addressed in the Reg. AT Supplemental Proposal would remain the same.

Click here to view the Cadwalader memorandum authored by Paul Pantano, Anthony Mansfield, Athena Eastwood, Neal Kumar, Natalie Mitchell and Lamiya Rahman.

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