Clarification by Enforcement Is Not the Ideal Way to Clarify Regulations

December 2, 2015
by VXfintech

Category: Market Activity

Vertex recently attended FIA's 31st Expo at the Hilton Chicago.

Approximately 5,000 people came to Chicago for the event. We saw many of the attendees on the Expo floor, at the opening festivities at City Winery and the lively CME Group Reception on Wednesday night. The crowds were energized and more international than we have seen in the past, with headline topics surrounding risk and compliance. One of our favorite moments occurred when we had the honor of speaking with John Damgard, former long-time president of the FIA. He reflected on how much the show has evolved into what it is today.

We enjoyed talking with booth participants in the new Innovation Pavilion and found the open side stage useful with its ongoing tech talks you could jump in and out of throughout the day. This type of early-stage innovation energy is needed in our industry, although in the future it would be helpful if those innovators could be co-located in a section near the main exhibitors.

Discussions at FIA centered around the regulatory environment in the U.S. and in Europe. Of particular interest to us at Vertex on the regulatory side was the climate surrounding scrutiny over issues related to spoofing. Coscia’s guilty verdict for spoofing elicited many responses during the conference such as the following:

FIA President and CEO Walt Lukken said precise guidance on spoofing would be welcomed by the industry and that, "Clarification by enforcement is not the ideal way to clarify regulations."

CFTC Chairman Timothy Massad said that one of his top priorities was to look at proposals to handle risks with automated trading that could cause market disruptions and in the aftermath of the guilty verdict in the Chicago "spoofing" trial he will: "...aggressively pursue market-manipulation cases."

The need to route out disrupters in the market is critical as well as the need for clarification on what that actual disruption pattern looks like. It will be interesting to see how these cases progress and clarity is quantified.

In the meantime, thank you to the FIA for a great show and we look forward to next year.