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CFTC Proposal for Accessing Traders’ Source Code Raises Serious Concerns

The Commodity Futures Trading Commission (CFTC) has approved proposals that would give it easier access to algorithmic traders' source code. A year ago the Commission unanimously approved a host of new rules designed to minimize the risks posed by automated trading and to give it the tools to deal with problems when they arise. The plan included giving CFTC staffers the ability to see regulated firms' source code - something that they can only currently do with a subpoena. The Commission is now voting on a new proposal that would require just a majority vote of its three members to gain access to source code.

Industry bodies are up in arms. Futures Industry Association (FIA), along with the FIA Principal Traders Group (FIA PTG), expressed grave concerns about the move, saying it would permit an unacceptable level of access to proprietary source code used to operate automated trading systems. According to Walt Lukken, President and CEO of FIA, the CFTC’s regulation of automated trading must focus on safeguarding markets through appropriate risk controls. He also said that they’re very disappointed that the Commission ignored the view expressed by a wide range of market participants as well as technology companies outside this industry that access to source code should require a subpoena. Source code deserves the same protections under the law as any other form of intellectual property. The proposed special call process simply does not meet that standard.

News Characteristics

Date : Apr 11, 2016
Region : North America
Industry : Banks
Function : Regulation and Compliance
Sub-Function : Regulatory changes