CFTC Creates Panel to Define High-Frequency Trading
February 9, 2012
The Commodity Futures Trading Commission voted Thursday to establish a subcommittee that will define what it considers high-frequency trading to constitute.
The Subcommittee on Automated and High Frequency Trading will create a definition will “serve as an initial step towards assessing the presence and impact of HFT in CFTC regulated markets for consideration of appropriate regulatory and policy responses,’’ the commission said.
The panel, whose members have not been established yet, will be a subcommittee of the commission’s overall Technology Advisory Committee, headed by Commissioner Scott D. O’Malia.
The committee has focused on automated trading and the Commission’s ability to maintain market integrity and safeguard against misfires such as a May 6, 2010, Flash Crash.
“I think the Technology Advisory Committee through advice and guidance this new Subcommittee on Automated and High Frequency Trading will provide a much needed holistic approach to identifying the criteria the Commission needs to incorporate into any further decision making regarding automated trading and HFT,” said O’Malia.
Four separate working groups will be established, as part of the process.
The first working group will define high frequency trading within the context of automated trading systems.
The second group will examine whether or not there should be multiple categories of HFT.
The third working group will focus on oversight, surveillance and economic analysis, to understand how such trading behaves compared to other automated systems.
The fourth working group will address market micro structure issues to identify possible disruptions that might be provoked by automated trading systems.
The subcommittee will be chaired by chief economist Andrei Kirilenko.