FOA Provides Guidance on Controls for Electronic Trading (with Lofchie Comment)

The Futures and Options Association has issued guidance aimed at providing listed derivative market participants with industry standards to mitigate the risk of transacting in electronic trading environments, in particular with regards to high-frequency and automated trading. The guidance looks to complement and build on the European Securities and Markets Authority guidelines on systems and controls in an automated trading environment, which came into force in May. Key objectives of the guidance include clarifying the duties and responsibilities of market participants.

Lofchie Comment: The guidance provides some very practical suggestions that I am sure will be useful, at least to legal and compliance personnel, in thinking through the risks associated with electronic trading and building a compliance system to deal with those risks. See in particular the detailed guidance that begins on page 6 (in the section with the very unimaginative title of detailed guidance). See also this related news item.