On June 25, 2020, the five commissioners of the Commodity Futures Trading Commission (CFTC), by a vote of three-to-two, withdrew proposed Regulation Automated Trading (Reg. AT), and by a vote of four-to-one, proposed a set of three new rules (Risk Principles) addressing electronic trading. In this process, CFTC moved substantially away from the earlier proposal, which had been met with widespread industry opposition at the time and would have subjected certain proprietary trading firms that engage in algorithmic trading to enhanced or additional CFTC oversight. In lieu of direct federal oversight, CFTC is now proposing that certain risk principles regarding electronic trading be adopted by derivatives exchanges. Whether CFTC’s “cancel and replace” proposal is perceived more favorably by industry participants than its predecessor remains to be seen, as does the practical implications if the Risk Principles are adopted.

Click here to read the full GT Alert, “CFTC Cancels and Replaces Proposed Regulation AT.”