Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

33 ways to control algorithmic trading

Earlier this month, the US Commodity Futures Trading Commission (CFTC) published a Concept Release on Risk Controls and System Safeguards for Automated Trading Environments. It seeks comments on a laundry list of 33 measures that could be adopted to control algorithmic and high frequency trading (I arrived at this count from the list on page 116-132, counting sub items in the first column also).

The proposals on this list range from the sensible to the problematic, and there does not seem to be much of an effort to analyse the economic consequences of these measures. The idea of the concept release appears to be to outsource this analysis to those who choose to submit comments on the concept release. There is nothing wrong with that. But with the current CFTC Chairman, Gary Gensler, set to step down soon, nothing much might come out of the concept release.


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