Senior Supervisor Group Issues Report on Algorithmic Trading
The senior financial supervisors from 10 countries who comprise the Senior Supervisors Group ("SSG") issued a report titled "Algorithmic Trading Briefing Note." The report assesses the risks associated with algorithmic trading, and identifies risk-based control principles and questions for supervisors and supervised firms to consider when assessing the current control environment.
The report also is intended to "facilitate thoughtful dialogue and action" to improve risk management practices. The report highlights key supervisory concerns, including whether risks associated with algorithmic trading activity have outpaced control environments and whether standard risk management tools are effective for ongoing monitoring.
Additionally, the report identities key control principles, and suggests questions for supervised firms to use to self-assess. The report concludes by stating that supervision should "remain flexible and adaptable to address the growth and evolution of algorithmic trading."