To keep pace with the increased level of sophistication of trading strategies and technological advances, global regulators are deepening their focus, supervision and stringent regulatory reach around electronic, algorithmic and high frequency trading (HFT) to minimize the risk of unfair and disorderly markets.
Regulators have sought to keep up with the constant change of the marketplace and in particular, they have poured significant resources into increased surveillance, technological innovation and intelligent recruitment of more experienced and specialized personnel to understand the complexity and sophistication of algorithmic trading and HFT.
Leveraging our specialist markets regulatory experience and insight, including team members who have worked directly for regulatory authorities, stock exchanges, investment banks and asset managers, we are uniquely placed to understand and review electronic and algorithmic trading systems and controls to ensure they meet regulatory requirements and expectations and minimize risk.
We can help ensure that your electronic and algorithmic trading strategies and systems are fully compliant with regulatory requirements:
- Assess the governance, review and approval process prior to deployment of an electronic or algorithmic trading strategy / system to ensure adequate consideration and sign off is provided
- Design, conduct and/or review the adequacy of technical, functional and stress testing procedures of electronic and algorithmic trading strategies / systems across realistic, varied and extreme trading conditions and scenarios (pre-implementation and on-going testing)
- Assess the nature, extent, level and adequacy of pre-trade controls and risk management limits within the electronic or algorithmic trading strategy / system to prevent erroneous orders or orders that may interfere with the operation of a fair and orderly market from being generated or passed into the market for execution
- Assess the ability and speed to automatically block or cancel orders that breach pre-trade control parameters on an order-by-order basis or over a specified period of time
- Review the process for determining and calibrating parameter values set for pre-trade controls and risk management thresholds by asset class, products, clients, traders, etc
- Review the adequacy of system capacity, resilience, security and business continuity arrangements
- Provide independent quality assurance that electronic and algorithmic trading strategies / systems are fully compliance with global and applicable local regulatory requirements and would not interfere with the operation of a fair and orderly market