High-Frequency Trading Registration Studied by U.S. Regulator

U.S. financial regulators would waste budget resources by requiring registration and audits of automated trading algorithms, according to an advisory group to the Commodity Futures Trading Commission.

Regulators would face difficulties establishing unique attributes of algorithms, which change frequently, in order to require registration, according to a summary of the group’s views scheduled to be presented today at a meeting of the technology advisory committee to the CFTC.

The agency, the main U.S. derivatives regulator, is considering new rules to oversee automated trading systems and high-frequency trading.

“Market abuse is not fundamentally a function of the means, speed or frequency of order entry and transactions,” according to the summary. “Focus should be on specific behaviors that undermine market integrity irrespective of the means or pace of order entry.”

The group said audits would be an ineffective use of budgetary resources with unclear benefits.

To contact the reporter on this story: Silla Brush in Washington at sbrush@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net

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