The Commodity Futures Trading Commission (CFTC) is scrapping its highly controversial plans for RegAT that would have allowed it to seize source code for trading strategies.
In what must be followed by a sigh of relief across the industry, the CFTC's new commissioner, Brian Quintenz, declared the provision "dead".
He further tried to restrain his own agency's past efforts to get a stronger handle on the automated aspects of trading world by criticising the proposed definition of an "Algorithmic Trading Person". According to Quintenz, this is "defined so broadly that anyone using something as simple as a trailing stop [...] would have been captured, forced to register with the Commission, and subject to the same rules and requirements as the most sophisticated High Frequency Trading firms".
He added that there needs to be a serious discussion about the circumstances under which automated activity can create large-scale market disruptions before a system to restrict this is put in place.