US Regulators Step up Algorithm Checks

Friday, September 2, 2011 Print Email

US regulators are probing high frequency traders on their trading strategies and even the algorithms they base trades on, according to reports.

Both the Securities and Exchange Commission and the Financial Industry Regulatory Authority have accelerated their efforts to investigate the processes used by traders, Reuters reports.

While Finra has been focusing on possible cases of market abuse, the SEC has made a number of requests for data to ensure firms are complying with regulations, it says.

Quoting officials from both organisations, the report says that requests for algorithm codes have been "ramped up", with broker-dealers and hedge funds alike targeted.

However the head of the SEC's office of compliance argues that specific requests for trading algorithms are "very rare". Appeals for algorithms to be handed over are mostly isolated to ensuring that hedge funds use the strategies they market to investors, Carlo di Florio told the news agency.

Source: GFS News

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