Yesterday was my first meeting in Washington, DC as a member of the CFTC’s Technology Advisory Committee, or TAC 2.0 as it is called. The meeting featured reports from working committees on aspects of high frequency trading, or HFT, as well as presentations about SEFs. The first task from Working Group #1 was to define what HFT is.
The working or provisional definition of HFT from Working Group number #1 was:
High frequency trading is a form of automated trading that employs:
(a) algorithms for decision making, order initiation, generation, routing, or execution, for each individual transaction without human direction;
(b) low-latency technology that is designed to minimize response times, including proximity and co-location services;
(c) high-speed connections to markets for order entry; and
(d) high message rate (orders, quotes or cancellations).
Other working groups had more granular assignments, some which depended somewhat on the definition of Working Group #1. Working Group #3, which featured representatives from the CME, ICE, NFA and others gave a report that says all the information the regulators need to analyze HFT and other forms of trading is already available.