How Quality Management System AT 9000 Can Make Automated and High-Frequency Trading Safer?

World's Most Influential High-Frequency Trading Conference Series: High-Frequency Trading Leaders Forum 2013 London

Andy Kumiega @ High-Frequency Trading Leaders Forum

Financial markets are critical for the growth and prosperity of all economies. Real-time automated trading systems are integral to these markets.  However, neither the technology nor market operations underlying automated trading is infallible. Therefore, it is the responsibility and self-interest of all market participants to continuously develop, identify, and apply best practices to prevent failures and improve effectiveness. The ANSI X9 D14 Working Group believes that development of a standard for, and widespread use of, quality management systems for automated trading will mitigate risks and improve effectiveness of trading operations and technology.  The ANSI X9 D14 Working Group expects its adoption to follow precedents set in other industries faced with challenges inherent in automation and, ultimately, this will result in automated financial markets that provide superior value to society in a responsible and reliable manner.

AT 9000 is a new family of quality management system standards and guidelines specifically designed for the automated trading industry. According to their website, it is a response to recent concerns about automated and high frequency trading and offers an alternative to regulation or major changes in market structure.

AT 9000 is a working title, to suggest that this standard is patterned after the ISO 9000 standards for quality management systems.  AT 9000 adds requirements for software development and risk controls germane for organizations that develop and use automated trading systems.

The goal of AT 9000 is to specify how all participants involved in automated trading should build their systems through process-driven research, development, operation, and control. By adhering to AT 9000, firms can credibly satisfy their organizational responsibilities of safety to financial markets.

For example, AT 9000 requirements include:

  • Safety controls such as real-time monitoring and kill switches are developed and tested.
  • Algorithm behavior has been verified, pre-release, under a variety of market stress conditions.
  • Software and system version management is routinely used.
World's Most Influential High-Frequency Trading Conference Series: High-Frequency Trading Leaders Forum 2013 London

Ben Van Vliet @ High-Frequency Trading Leaders Forum

AT 9000 is being developed within the U.S. national (American National Standards Institute – ANSI) and international (ISO) standardization processes. ANSI has formally chartered the X9 D14 working group to conduct this work; “AT 9000” is a working title for this standard. In addition, the AT 9000 Advocacy group was formed to facilitate discussion of and education about AT 9000; once the standard is released, this group plans to work to promote and support adoption of AT 9000. Members of this group include: Bob Binder, Justin Bouchard, Keith Fishe, Andy Kumiega, Sagy Mintz, Jim Northey, Rajeev Ranjan, Ben Van Vliet, Greg Wood and Zach Ziliak.

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