On November 24, 2015, the Commodity Futures Trading Commission (“CFTC” or “Commission”) held an open meeting to propose the regulation of automated trading (“Regulation AT”). According to the CFTC, the purpose of Regulation AT is to minimize the potential for disruption that may arise from the automation of order origination, transmission, or execution. Proposed Regulation AT includes transparency measures and pre-trade and other risk controls for clearing member futures commission merchants (“FCMs”), designated contract markets (“DCMs”), and market participants using algorithmic trading systems. Furthermore, the CFTC is proposing a new registration requirement for persons engaged in proprietary algorithmic trading on a DCM through direct electronic access.
The proposal includes a 90-day public comment period that will begin the day the proposal is published in the Federal Register, which we expect to occur sometime next week. Below is a summary of proposed Regulation AT based on the open meeting and the fact sheet published on the CFTC’s website.