CFTC Panel Urges Broad Definition of High-Frequency Trading

Reuters/Chip East

Bloomberg News – By Silla Brush – June 21, 2012

U.S. financial regulators should adopt a broad definition of high-frequency trading to prevent “regulatory arbitrage,” according to an advisory committee to the Commodity Futures Trading Commission.

“It is important to recognize that high-frequency trading is a means rather than an end in itself, and that there are many types of market activity that can be potentially labeled as HFT,” members of a CFTC advisory working group said in a report to the agency’s Technical Advisory Committee.

The working group, includes Getco LLC’s Sean Castette, Deutsche Bank Securities Inc.’s Greg Wood and NYSE Euronext (NYX) (NYX)’s Colin Clark, presented their draft definition today at a Washington meeting of the technical committee led by Republican Commissioner Scott O’Malia. The definition spurred divisions on the panel underscoring the difficulty regulators may have in writing rules to govern trading on about half of equities and futures markets.

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