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High-Frequency Traders Can Keep Code Secret Under New CFTC Rule

  • Regulator approves ‘risk principles’ for algorithmic trading
  • Exchanges must have rules in place to prevent disruptions
Heath Tarbert said that exchanges will be required to have rules that “prevent, detect and mitigate market disruptions and system anomalies associated.”

Heath Tarbert said that exchanges will be required to have rules that “prevent, detect and mitigate market disruptions and system anomalies associated.”

Photographer: Kyle Grillot/Bloomberg

U.S. derivatives regulators have approved regulations for high-frequency trading that exclude a controversial plan that would have increased government access to traders’ computer code.

The Commodity Futures Trading Commission regulation adopted Tuesday largely tracks with the agency’s June proposal and will formally require exchanges to take steps aimed at thwarting unintentional disruptions due to algorithmic trading. Instead of targeting code that traders consider to be intellectual property, the CFTC’s “risk principles” aim to codify many practices that are already in place.