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CFTC set for committee to scrutinise HFT

Tuesday 31 January 2012 – by [email protected]

The Commodity Futures Trading Commission is to establish a subcommittee looking into high-frequency trading, according to reports.

Commissioner Scott O’Malia will on Tuesday propose the new committee to look at establishing a working definition of HFT, the Wall Street Journal said.

Quoting the commissioner’s leaked proposal, it says that the group would also look at ways high-frequency trading could be more closely monitored and to identify possible market problems that the practice could amplify.

The subcommittee, which would be part of the CFTC’s technology advisory committee chaired by O’Malia, would be led by CFTC chief economist Andrei Kirilenko.

Regulators have ramped up pressure on HFT following the 6 May 2010 flash crash, where markets plunged only to recover losses within minutes. The plummet was blamed in part because of high frequency traders, who aggressively sold off contracts after an unusually large sale of futures.

The Securities and Exchange Commission has stepped up probes on high frequency traders and the algorithms they use, while the CFTC’s commissioner Bart Chilton has pushed for traders to face mandatory registration requirements as a “bare minimum”.

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