“The top U.S. derivatives regulator is poised to announce a range of potential methods for overseeing automated and high-frequency trading, according to four people with knowledge of the matter.
“The Commodity Futures Trading Commission’s four members are within days of approving the concept release, according to the people who spoke on condition of anonymity because the document isn’t yet public. Approval of the release, a step prior to proposing new rules, would trigger a public-comment period.
“The agency, along with the Securities and Exchange Commission, has scrutinized high-frequency and algorithmic trading since May 6, 2010, when $862 billion in equity value was erased in 20 minutes before share prices recovered. The CFTC’s release, which has been debated for more than a year, would seek comment on new testing, supervision and risk controls for automated trading, CFTC Chairman Gary Gensler said in April.
“A number of recent computer malfunctions have raised questions about the reliability of electronic markets. The latest occurred yesterday, when malfunctioning software that feeds data between exchanges prompted the Nasdaq Stock Market to halt trading in thousands of stocks and options.”
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