CFTC to hold a public meeting to focus on HFT

The Commodity Futures Trading Commission (CFTC) announces that on Thursday, March 29, 2012, the CFTC’s Technology Advisory Committee (the “TAC”)

The Commodity Futures Trading Commission (CFTC) announces that on Thursday, March 29, 2012, the CFTC’s Technology Advisory Committee (the “TAC”) will hold a public meeting at the Commission’s headquarters in Washington, DC from 10:00 a.m. to 5:00 p.m. This meeting will focus on three significant issues facing the futures and swaps industries as the Commission continues to finalize rules under the Dodd-Frank Act.

Those issues are:

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  1. automated and high frequency trading (HFT): exchange oversight and definitions;
  2. final recommendations from the Subcommittee on Data Standardization; and
  3. credit limit checks: market structure and technology issues.

This public meeting of the full TAC will also serve as the inaugural meeting of the new Subcommittee on Automated and High Frequency Trading.

Subcommittee will focus on developing recommendations regarding the definition of high frequency trading (“HFT”) in the context of the larger universe of automated trading

The CFTC received nominations for more than fifty highly qualified persons in response to the Federal Register Notice of February 14, 2012.

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The CFTC has selected the following members:

Irene Aldridge of ABLE Alpha Trading, Ltd., Peter Buckley of Newedge USA, LLC, Sean Castette of GETCO, Colin Clark of NYSE Euronext, Christopher Concannon of Virtu Financial, LLC, Edward Dasso of the National Futures Association, Keith Fishe of TradeForecaster Global Markets, LLC, Joel Hasbrouck of the New York University Stern School of Business, Robert Hegarty of Thomson Reuters, Terrence Hendershott of University of California Berkeley, Chris Isaacson of BATS Global Markets, Inc., Paul Kepes of Chicago Trading Company, Jordan Lea of the American Cotton Shippers Association, Chris Lorenzen of Eagle Seven Holdings, LP, Michael Mendelson of AQR Capital Management, Jim Northey of FIX Protocol Ltd., Dean Payton of CME Group, Peter Reiss of DE Shaw & Company, Joseph Saluzzi of Themis Trading, LLC, Tim Sargent of Markit, Larry Tabb of Tabb Group, Jitesh Thakkar of Edge Financial Technologies, Mark Wassersug of Intercontinental Exchange, Inc. (ICE), and Gregg Wood of Credit Suisse Securities (USA), LLC.

Commissioner Scott D. O’Malia, the chairman of the TAC, stated that, “It is my expectation that the highly qualified individuals chosen for the new subcommittee will bring the full Technology Advisory Committee workable recommendations as to how the CFTC ought to define and recognize HFT and other automated trading in any further efforts to address their impact and role in its jurisdictional markets.”

The Subcommittee on Automated and High Frequency Trading will be chaired by the CFTC Chief Economist Andrei Kirilenko and will conduct multiple sessions throughout remainder of the year. The Subcommittee will consist of four separate working groups, each tasked with identifying specific issues associated with automated trading. The first working group will be tasked with defining 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. Specifically, that working group will be requested to examine distinctions in trading activity and how such distinctions should be tagged by the exchanges. The third working group will focus on oversight, surveillance and economic analysis, to understand how HFTs behave as 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 and potential solutions to mitigate such events. The Subcommittee will present a report with its recommendations to the full TAC, which will consider the report and make recommendations to the CFTC.

The TAC meeting is open to the public with seating on a first-come, first-served. Audio of the meeting will be available via listen-only conference call. Additionally, a video recording of the meeting will be published through a link on the CFTC’s website.

All written submissions provided to the CFTC in any form will also be published on the website of the CFTC.

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