Automation Rule for Exchanges to Be Revisited

Codification of the U.S. Securities and Exchange Commission’s so-called automation review policy, or ARP, program is attracting more attention as a next step to strengthening market technology rules for exchanges and clearing agencies.

The voluntary ARP program, which most market centers already treat as mandatory, has long deserved revisiting in the form of a mandatory set of rules, according to James Burns, deputy director in the SEC’s Division of Trading and Markets.

SEC staff is working to put forward a recommendation to codify the ARP standards at the behest of Chairman Mary Schapiro, Burns said during an Investment Company Institute webcast on Hurricane Sandy and the impact on financial markets and market structure issues. The ARP program was established after the market crash of 1987 as a set of best practices to ensure exchanges and clearing agencies have systems around compliance and continuity to handle sudden surges in trading.

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