We need thoughtful position limits and oversight of mammoth OTC trading, Bill Chilton, member of the Commodity Futures Trading Commission. Regulators should look into placing new restrictions on financial trading technology to prevent a repeat of the May 6 "flash crash".
We need thoughtful position limits and oversight of mammoth OTC trading, Bill Chilton, member of the Commodity Futures Trading Commission. Regulators should look into placing new restrictions on financial trading technology to prevent a repeat of the May 6 "flash crash".
Speaking at an event sponsored by the Federal Reserve Bank of Boston, CFTC Commissioner Bart Chilton said that the May 6 event was "exacerbated by financial technology" and that regulators need to play catch-up to better oversee these new trading practices.
"Without fully understanding all of the ramifications of this technology, we will continue to witness market aberrations," he said.
"Perhaps there should be certain limits or parameters on fintech trading? Perhaps the size of trades should be regulated, or the time period in which they could occur should be limited or more closely monitored? These questions and many others need examination," he added.
Banking and financial market trading laws were weakened a decade ago, and the results were disastrous, Chilton complained saying that the current status quo is unacceptable.
Chilton therefore calls to include some additional, absolutely critical items in the final reform bill.
“First is the requirement to impose position limits across markets and inclusion of enhanced consumer protection measures, he said”. “I also want to ensure that we have a provision granting the CFTC additional authority to go after disruptive trading practices that we haven’t been able to successfully prosecute for decades.”
Full speech
© CFTC - Commodity Futures Trading Commission
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