MFA Submits Comments on Proposed Wash Trade Advisory (with Lofchie Comment)

The MFA has submitted comments to the CFTC in response to the CME Group's proposed Market Regulation Advisory Notice for Exchange Rule 534 ("Wash Trades Prohibited"). The MFA letter expressed support for the clarification of the standards for prohibited wash trades, as well as for CME Globex Self-Match Prevention functionality.

Lofchie Comment: The fundamental issue is that (i) two traders working independently or (ii) two electronic trading algorithms running independently, each trading in the same contract for the same trading firm, are inevitably going to trade with each other (which is to say that the firm will trade with itself). In the absence of intent, it would not seem that such "wash trading" should be the subject of an enforcement action.

See: MFA Blog Release; MFA Comment Letter to CFTC. See also: CFTC Seeks Comment on CME Advisory Notice Regarding Wash Trades (July 15, 2013).