A group of leading trade associations, including the Futures Industry Association ("FIA"), the FIA Principal Traders Group, the Managed Funds Association ("MFA"), ISDA and the SIFMA Asset Management Group ("AMG") (collectively, the "Associations") urged the CFTC to focus on pre-trade risk controls instead of promulgating one-size-fits-all prescriptive rules. They also urged the CFTC to continue the dialogue with the industry groups on the remaining portions of proposed Regulation Automated Trading ("Reg. AT").

The Associations recommended:

  • separating and holding roundtables on different aspects of the rule instead of holding a single roundtable that currently "tries to accomplish too much in one rulemaking";
  • establishing pre-trade risk controls that would be implemented by market participants, or administered by the Futures Commission Merchant, that facilitate electronic access to the market;
  • focusing on electronic orders that are subject to pre-trade risk controls rather than on the proposed definition of "AT Person," which "fails to work with any of the major elements of Reg. AT";
  • separating out new registration requirements from the proposed pre-trade risk controls under Reg. AT in order to create a "carefully defined" registration category;
  • requiring the application of pre-trade risk controls for all electronic orders regardless of the participant's registration status;
  • continuing the current practice with Source Code, the production of which should be available only through a legal process in which the owner of the Source Code has the right to petition a court for appropriate protection;
  • addressing the treatment of third-party software; and
  • requiring affected parties to certify individually that they materially comply with the relevant aspects of Reg. AT and to make the proposed annual reports available to either the appropriate Designated Contract Markets or the CFTC upon request.

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