Duplicating a control and strengthening a control are not necessarily the same thing. CFTC’s November 25, 2016 supplemental Regulation AT proposal would replace its proposed three-level risk-control structure with two levels. The economic question is whether the revised allocation could avoid redundant work without weakening safeguards. This November 26 retrospective describes a design under consultation, not a realized saving. [2016-27250]
One level would be the automated trading person or its futures commission merchant; the other would remain the exchange. A firm could delegate pre-trade controls to the intermediary. That option changes the proposed location of compliance work, but the notice does not establish the price an intermediary would charge or how an individual firm’s costs would respond. [2016-27250]
The 2015 proposal had already combined risk controls with transparency in a broader framework for automated derivatives trading. The supplement kept unamended provisions in play. It added a proposed 20,000-contract daily average threshold over six months, including customer and proprietary accounts across designated contract market products. This concerned AT Person scope, not a blanket small-firm exemption from safeguards. [2016-27250][2015-30533]
For competition, the useful distinction is between an option to organize work differently and evidence that market entry becomes cheaper. These notices supply the former, not the latter. They are stages of one CFTC process, not separate tests of economic benefits. January 24, 2017 marked the comment deadline, leaving both the scope calculation and the control architecture as proposals at this coverage date. [2016-27250][2015-30533]
Source documents
- Regulation Automated Tradinghttps://www.govinfo.gov/content/pkg/FR-2016-11-25/html/2016-27250.htm
- Regulation Automated Tradinghttps://www.govinfo.gov/content/pkg/FR-2015-12-17/html/2015-30533.htm