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CFTC plan to access source code slammed as regulatory overreach

Joe Mont | November 7, 2016

The latest regulatory effort to improve oversight of high-speed, automated trades that, when they go bad, can trigger flash crashes and other market disruptions is a proposal advanced by the Commodity Futures Trading Commission on Nov. 4.

The plan, however, is not without controversy with Commissioner J. Christopher Giancarlo echoing concerns expressed by many of the covered firms and recoiling against what he described as a dangerous regulatory precedent.

The CFTC’s proposed amendments to its Regulation AT (for “automated trading”) would require “reasonable risk controls, using a principles-based approach that would codify many industry best practices,” according to Chairman Timothy Massad. It would also require testing and monitoring of algorithms and the preservation of source code and other...

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