Bridging the Week: March 14 – 18, and 21, 2016 (Regulation AT; Equivalence Recognition; Fund Manager Misstatements; Conflicts of Interest; Trade Options)

In response to its proposed Regulation Automated Trading, the Commodity Futures Trading Commission received approximately 50 written views by the termination of the proposal’s comment period last week. Submitted comments often criticized both the too broad reach and the exclusion of certain algorithmic traders from the scope of Regulation AT, as well as the highly prescriptive nature of the proposed rules. Also last week, both the CFTC and the European Commission formally recognized each other’s oversight of clearinghouses as equivalent. As a result, the following matters are covered in this week’s edition of Bridging the Week:

  • Industry Comments to Regulation AT Argue CFTC Proposed Rules Too Prescriptive; Registration and Source Code Requirements Particularly Objectionable (includes My View);

  • CFTC Approves Substituted Compliance Framework for EU Based DCOs; EC Formally Recognizes US CCPs as Subject to Equivalent Regulation;

  • Fund Manager Resolves CFTC Charges Related to Material Misstatements and Omissions by Agreement to Pay Over US $5.65 Million in Disgorgement and Fine;

  • Investment Adviser Agrees to Pay More Than US $9.5 Million to SEC for Steering Clients to Funds’ Share Classes With Higher Fees When Share Classes With Cheaper Charges Available;

  • CFTC Adopts Final Trade Option Rule and Eliminates Certain Reporting and Recordkeeping Requirements for Commercial End Users;

  • Retail Forex Dealer Fined by CFTC for Failing to Meet Minimum Capital Requirements and Notification Requirement; Agrees to Withdraw Membership to Resolve Parallel NFA Charges (includes Compliance Weeds);

  • IB and Principal Fined for Fabricating and Lying About Email Purportedly From NFA; and more.


Industry Comments to Regulation AT Argue CFTC Proposed Rules Too Prescriptive; Registration and Source Code Requirements Particularly Objectionable

  • After declining multiple requests to extend the comment period that expired on March 16, the Commodity Futures Trading Commission received approximately 50 written responses to its proposed Regulation Automated Trading. A wide range of responders, including trade organizations, vendors, market participants, public interest groups and individuals, wrote comments.

    Although responders generally approved of the CFTC’s objective of ensuring robust controls, transparency measures and other safeguards to mitigate risks arising from algorithmic trading on designated contract markets, the majority of comment letters criticized the proposed rules as too prescriptive.\

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