Vedder Thinking | News Sam Tyfield Weighs In on U.S. Regulators’ Proposal to Examine Trading Firms' Source Code
Sam Tyfield, a Partner in Vedder Price's London office and a member of the firm's Finance & Transactions and Investment Services practice groups, was recently quoted in the Financial Times' article titled "U.S. Regulators Propose Powers to Scrutinise Algo Traders' Source Code." The article discusses the newly proposed source code inspection rules set forth by the Commodity Futures Trading Commission and the U.S. Department of Justice. Trading firms have their software and online repositories highly protected, since this coding represents the livelihood of such firms. Data and security breaches that have transpired over the past five years, however, have caused U.S. regulators to request access to firms' source code in hopes of reducing future trading accidents—a request that has much of the industry worried.
The proposed rules will require trading firms that use algorithms to register their exchanges directly with the CFTC. While many are skeptical about the rules, others see these CFTC regulations as a way for the agency to align itself with other algorithmic trading procedures currently taking place in Europe. Mr. Tyfield commented on this fact, stating, "The rules say EU-registered firms must keep records of any changes they make to any software used for trading for five years, which arguably amounts to them keeping the source code."
To read more of Mr. Tyfield's commentary, click here (log-in credentials required).