CFTC Commissioner Chilton is calling for the creation of a registration category for high-frequency trading firms that buy or sell rapidly, in order to help U.S. regulators determine whether new rules should be imposed on them as a group.
In an interview during the TradeTech conference in New York, Chilton said that private automated trading companies and unites in banks that rely on split-second timing to implement strategies should register as high frequency traders for oversight. Banks and brokers are already regulated, but some proprietary firms have no supervision.
Chilton called the lack of regulation a “gaping hole in our regulatory oversight.”
“We should compel registration,” he said. “Then we can determine what they might need to be required to do to ensure markets are efficient and effective.”
The CFTC intends to create a group to investigate and define automated and high-frequency trading. The group will work within its technology advisory committee.
Chilton warned against accepting technology as a force of good without proper evaluation.
“To blindly accept that all technology and the way it’s being used is nothing but good is a naive attitude in general and a dangerous attitude for regulators.”