The Delta Strategy Group released a summary of comment letters received by the CFTC during the second comment period of its proposed Regulation Automated Trading ("Reg. AT"). The summary categorizes the comment letters by registration, source code, definitions, risk controls, self-trade prevention, annual reports, software development, deployment and testing, and swap execution facilities.
Highlights from the comments made by various industry groups and associations include:
- the rulemaking is too prescriptive and instead should be more principles-based;
- the rulemaking should focus on implementing appropriate risk controls (pre-trade risk and other controls) and address other important areas in a separate rulemaking;
- requirements specific to AT Persons or persons engaged in algorithmic trading should be considered in separate rulemakings differentiated from the requirements applicable to all market participants;
- registration for AT Persons is unnecessary, would have unintended consequences, and is an inappropriate criterion for triggering risk controls;
- the proposed definition of "Direct Electronic Access" ("DEA") is problematic in that the DEA is not an appropriate filter for determining an AT Person;
- the definition of "algorithmic trading" should focus only on algorithmic trading activity that may pose a risk to the derivatives markets; and
- the CFTC should not be permitted to obtain source code via a subpoena.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
