US futures and options regulator the Commodity Futures Trading Commission (CFTC) is set to hold the second meeting of its Technology Advisory Committee, reestablished in direct response to the
”flash crash' on 6 May, which is charged with keeping the CFTC informed of technology-led changes in the derivatives market.
The meeting, which will be held on 12 October at the CFTC's Washington DC headquarters will focus on high-frequency and algorithmic trading practices and the role of technology in pre- and post-trade transparency related to the implementation of the Dodd-Frank financial reform bill and the flash crash, which briefly sent US markets into a tailspin.
In addition Andrei Kirilenko, a senior financial economist at the CFTC will present his new paper titled ”The flash crash: the impact of high-frequency trading on an electronic market', as well as summarising the joint CFTC and SEC
”flash crash' report on which he worked.
“While I do not believe that the flash crash was the direct result of reckless misconduct in the futures market, I question what the CFTC could have done if the opposite were true,” said CFTC commissioner Scott O'Malia. “When does high-frequency or algorithmic trading cross the line into being disruptive to our markets? And, along those same lines, who is responsible when technology goes awry? Do we treat rogue algorithms like rogue traders? These are the issues I hope to explore at our 12 October meeting.”
The meeting will also explore the role of technology in the futures and swaps markets in terms of pre- and post-trade transparency and how swap execution facilities and swap data repositories achieve these objectives, including presentations on current rule making and the technological implications for interim data collection.
The first meeting of the TAC on 14 July also debated the impacts algorithmic and high-frequency trading have on the market and whether best practices and regulatory standards related to these activities should be implemented.