MFA Letter on ICE Futures Passive Order Protection Functionality
March 15, 2019
MFA submitted comments to the CFTC raising concerns with the ICE Futures rule amendment to implement a passive order protection functionality, an asymmetric delay or “speed bump”, at a delay speed and on futures contracts of its discretion. MFA raised concerns that an asymmetrical speed bump is inconsistent with the Commodity Exchange Act and the CFTC’s DCM core principles for impartial access and competitive, open and efficient markets. Specifically, MFA raised concerns that a speed bump that only applies to incoming order and not to resting orders is discriminatory in its nature by providing market participants with unequal access to markets; and unfair because it creates and provides an informational advantage to certain market participants. The letter cited asymmetric speed bump concerns raised by the SEC Investor Advocate and findings from a study of a Canadian exchange’s asymmetric speed bump, indicating harm to institutional and retail investors. Finally, to the extent the CFTC supports ICE Futures experimenting with an asymmetric speed bump, MFA urged that the CFTC should only approve a narrowly tailored rule amendment for a pilot period of 12 months.