Commissioner O'Malia Issues Further Guidance on Disruptive Trading Practices (with Lofchie Comment)

CFTC Commissioner O'Malia issued a definition of three trading practices that he explained to be disruptive: "strobing," "laddering" and "front-running".

Lofchie Comment: Several days ago, the CFTC adopted its interpretative guidance on impermissible disruptive trading practices. On that day, the CFTC issued a FAQ explaining what practices were considered disruptive. Subsequently, the CFTC issued its formal guidance. That guidance was extremely ambiguous and overbroad; it went well beyond what was contained in the FAQ. Now there is a further set of definitions by Commissioner O'Malia which I think are clearer than the CFTC's formal guidance. But it still leaves open the actual question of what constitutes a disruptive trading practice: Does the formal guidance trump the other two documents, or do the other two documents limit the formal guidance?

Click here to view the disruptive trading practice examples suggested by Commissioner O'Malia. See also: CFTC Publishes Final Text of Disruptive Trading Guidance (with Explanation from Delta Strategy Group) (with Lofchie Comment).See also: CFTC Provides Guidance on Disruptive Practices (with Mocek Comment).