FIA Issues Guide on the Development and Operation of Automated Trading Systems

The FIA has released a guide to the development and operation of automated trading systems.

The Guide to the Development and Operation of Automated Trading Systems presents a comprehensive overview of the approaches that should be considered when building, managing, and reviewing automated trading systems.

 

The Guide was developed over the course of a year by a committee of the FIA Market Technology Division, along with the FIA Principal Traders Group (FIA PTG) and the FIA European Traders Association (FIA EPTA). The FIA Market Technology Division Automated Trading Committee is co-chaired by Greg Wood, president of the Division, and Leslie Sutphen, president of Financial Markets Consulting. The Committee represented a broad range of industry participants, including exchanges, brokers, and principal traders. In addition, the authors consulted work done by regulators, standards bodies, and exchanges to determine the scope of the guide, and to develop a consensus description of current practices.

The Guide addresses a broad range of categories relevant to automated trading systems, and presents current approaches in the following areas:

  • Pre-Trade Risk Controls
  • Post-Trade Analysis
  • Co-Location
  • Disaster Recovery/Business Continuity
  • Automated Trading System Development and Support
  • Security
  • Trading System Operations
  • Documentation of Policies, Procedures and Systems

“I would like to thank all the industry members that contributed to this paper,” said Walt Lukken, president and CEO of FIA.  “This guide is the culmination of years of work by FIA on risk management and system safeguards.  The result is a sophisticated framework that will serve as a resource for all types of market participants, across asset classes, in any market where there is automated trading.  FIA, FIA PTG, and FIA EPTA will continue to work to produce thought-leadership on principles-based risk management and system safeguards.  We look forward to discussing the practices set forth in this guide, and continuing our work to enhance the safety and integrity of our markets.”