MFA submitted comments to the CFTC on August 24, 2020 in support of its Electronic Trading Risk Principles Proposal. MFA supported the proposal and the CFTC’s initiative to address “the prevention, detection, and mitigation of market disruptions and system anomalies associated with the entry of electronic orders and messages into DCM’s electronic trading platforms. While MFA believes current market structure and rules governing electronic trading are robust and effective, the Proposal creates a stable regulatory structure to maintain and enhance electronic trading in future years. The letter supports the Proposal as striking an appropriate balance by establishing a risk control framework at the DCM level based on an “objectively reasonable” standard while also providing DCMs the flexibility to determine the best way to implement that framework. The Proposal requires a DCM to:
- Adopt and implement rules governing market participants subject to its jurisdiction to prevent, detect, and mitigate market disruptions or system anomalies associated with electronic trading;
- Subject all electronic orders to exchange-based pre-trade risk controls to prevent, detect, and mitigate market disruptions or system anomalies associated with electronic trading; and
- Promptly notify Commission staff of any significant disruptions to its electronic trading platform(s) and provide timely information on the causes and remediation.