In a complete reversal of the previous administration’s hardline approach to algo trading, the CFTC has revealed it will review and simplify its oversight, calling the previous approach “a top-level disregard for the enormity of the trading method spectrum, and, therefore, a disregard for the proper assessment of market risk posed throughout that broad spectrum.”
CFTC Commissioner Brian Quintenz (pictured), who is also the sponsor of its Technology Advisory Committee (TAC), has called the Commission’s attempt to regulate automated trading last December a “lame-duck re-proposal of Regulated Automated Trading (that) attempted to address the breadth of the AT person definition by including a trading frequency threshold, it was still a registration scheme. I don’t believe the right answer is to regulate and dictate all algorithmic trading activity.”
Addressing the Symphony Innovate 2017 Conference held this week in NYC, Quintenz continued: “The right answer is to understand and address automated trading risk. The agency needs to reset its posture on this issue, and we need to have a serious discussion about the finite circumstances under which automated, algorithmic activity can create large-scale market disruptions.”
“Only then should we examine what, if any, additional regulatory solutions are necessary to address those concrete and specific instances.”
Commissioner Quintenz confirmed he intends to explore these issues within the TAC, and concluded: “Let me use this opportunity to say the prior administration’s massively over-reaching and highly concerning “source code repository” proposal is D-E-A-D.”
