MFA Submits Letters to CFTC in Connection with Roundtable on Regulation AT
June 24, 2016
On June 24, MFA submitted an individual letter and a joint letter with other associations to the CFTC as part of its re-opened comment period in connection with the June 10 CFTC Roundtable on certain elements of Regulation AT.
The MFA letter, in response to the CFTC Roundtable:
- Urged the CFTC to address marketplace risk through marketplace risk controls (including pre-trade and other risk controls)—both at the designated contract market (“DCM”) and through the futures commission merchant (“FCM”) providing trading access. In addition, MFA supported a regulatory framework where a market participant could choose to implement the Commission’s required marketplace risk controls in lieu of going through an FCM’s risk controls, and be subject to Commission oversight.
- Reiterated our concern that it would be unfeasible for CPOs and CTAs to comply with Regulation AT’s proposals regarding development, monitoring and compliance with respect to third party algorithms.
- Urged the CFTC to consider adopting a principles-based source code retention requirement and to abandon its proposed source code repository requirement, which would have provided regulators with unfettered access to a registrant’s proprietary source code.
- Urged the CFTC to address standards for the development, monitoring and compliance of algorithmic trading systems in a later stage rulemaking, after further roundtable discussions on current practices.
In addition, MFA also co-signed and submitted a Joint Letter with FIA, FIA PTG, ISDA and SIFMA AMG on Regulation AT. The Joint Letter provided additional details on questions raised at the CFTC Roundtable and on registration.