CFTC Proposes Rules Regulating Automated Trading

16 December 2015
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Key takeaways

  • The CFTC has proposed a new “Regulation Automated Trading” or “Regulation AT” to implement a comprehensive regulatory framework for algorithmic (or automated) trading activity.
  • The proposed rules follow a multilevel approach by requiring certain risk controls and by imposing a range of reporting, recordkeeping and other compliance obligations on firms that engage in algorithmic trading (“AT Persons”), their clearing member futures commission merchants and designated contract markets, as well as a requirement that firms engaged in algorithmic trading using direct electronic access must register as floor traders (and thereby become subject to the requirements applicable to AT Persons.
  • The proposed rules do not vary based on whether an entity engages in or facilitates high-frequency trading or based on the connectivity method; rather, the same requirements apply to all algorithmic trading.