US Treasury recommends HFT firms be identified in TRACE data


By The DESK.

In a review of market structure issued on 6 October 2017, the US Treasury has recommended closing the gap in the granularity of data disclosed by high-frequency trading (HFT) firms, also known as proprietary trading firms (PTFs) and broker dealers in the US government bond market on the Trade Reporting And Compliance Engine (TRACE).

To close the gap between disclosure of dealers and PTFs, trading platforms operated by Financial Industry Regulatory Authority (FINRA) member broker-dealers, that facilitate transactions in US Treasury securities, would be required to identify customers in their reports of Treasury security transactions to TRACE.

The Treasury intends to work with the Securities and Exchange Commission (SEC) and FINRA to assess the feasibility of, and implement, this policy. Because most PTF activity occurs on electronic interdealer broker (IDB) platforms, requiring them to identify customers would capture a large fraction of total PTF trading volume, according to the results of the Joint Staff Report, which reported on the flash crash which took place in US Treasuries in October 2014.
©TheDESK 2017