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October 2, 2020

One Step Back…CFTC’s Proposal on Electronic Trading Misleading

Better Markets expressed disappointment with the CFTC’s recently proposed regulations governing electronic trading principles. 

Electronic trading, while often beneficial to market quality, presents complex, varied and extensive risks to market integrity, orderly trading, fair competition and the price discovery process across derivatives markets. However, instead of thoughtfully addressing these risks, the CFTC has proposed largely redundant measures masquerading as meaningful regulatory action.

In fact, the CFTC’s proposal is not only duplicative but dangerously close to deceptive as we explain in our comment letter. The agency outlines essentially unenforceable measures that would do almost nothing new to address electronic trading risks and yet uses those minimal measures as pretext to withdraw the previously proposed Regulation Automated Trading, which would have taken useful initial steps to address electronic trading risks.

When the inevitable next flash crash occurs, the CFTC’s determination to proceed with a proposal that knowingly leaves numerous market structure frailties and disruptive trading practices unaddressed will be closely scrutinized. Read more in this blog, press release and comment letter.



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