CFTC Revises Proposed Reg AT

The Commodity Futures Trading Commission (CFTC or Commission) on November 3, 2016, proposed revisions (the Supplemental Proposal)¹ to proposed Regulation Automated Trading (Reg AT).² Reg AT, if adopted, will broadly affect those in the futures industry who trade electronically, imposing new registration and supervision requirements on algorithmic traders. The modifications would impose greater process requirements on the Commission in obtaining access to algorithmic trading source code, reduce necessary risk controls from three levels to two, introduce a minimum volume threshold to the "AT Person" definition, and substitute a certification for the previously proposed annual report. These changes should reduce some of the burdens of the rule as originally proposed. As the 2-1 vote of the Commission indicates, however, the provisions relating to Commission access to source code data, even as modified, no doubt will remain quite controversial.