Commodities and Futures Trading Commission Offers First Draft Definition of High Frequency Trading

Scott O’Malia, a commissioner for the Commodity Futures Trading Commission, has proposed a seven-part test to be used as “building blocks” towards defining “high-frequency trading”. Mr. O’Malia suggests that an established definition of “high frequency trading” would form the first part of a three-stage regulatory approach aimed at addressing the acceleration of technologies in futures markets. It is unclear how these principles would work in practice or whether all of the requirements would need to be fulfilled to constitute “High Frequency Trading”.

The full text of Mr. O’Malia’s letter can be found here.