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CFTC Ready To Slow Down High-Frequency Trading

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In quaint, anachronistic terms, the regulator is creating a “road map” to figure out how to keep HFT from ruining everything. Eventually.

The CFTC's road map, which runs more than 100 pages and could be released as early as next week, will address issues ranging from how to control runaway trading algorithms that can wreak havoc in the market to whether high-frequency firms should register with the government. The road map, which must be approved by the commission before it is officially released, could pave the way for more direct scrutiny of such activities, according to Scott O'Malia, an agency commissioner who helped spearhead the plan.

Measures that could eventually be taken by the CFTC, and that are weighed in the plan, include tagging high-speed firms with a code that allows regulators to track their orders more closely….

The agency is proceeding cautiously, and the road map asks more than 100 questions, many of which are intended to help "understand the consequences [of new rules] before we take action," Mr. O'Malia said. The CFTC's Technology Advisory Committee, an industry group that has been looking into high-speed trading and is led by Mr. O'Malia, plans to hold a discussion of the report at its Sept. 12 meeting.

CFTC Moves to Rein In High-Speed Traders [WSJ]