NEW YORK, N.Y. – Regulators are proposing new procedures to more closely monitor high-speed trading in response to wild market swings brought on by a series of technical breakdowns.
More than 70 per cent of all trading today is automated, The Commodity Futures Trading Commission said Tuesday as it voted unanimously in favour of new registration standards for high-speed traders.
The systems use algorithms to spot variances in market data, allowing trading firms to deliver buy and sell orders in milliseconds.
That technology has led to a number of high-profile glitches, including one this summer that shut down the New York Stock Exchange for almost half a day.
The CFTC proposals would require some traders to register with the commission, specifically those “engaged in algorithmic trading through direct electronic access” to major U.S. markets.
They also call for tools to prevent “self-trading,” when one firm takes both sides of a trade.