FOOTNOTE 97 The Commission would like to better understand what sorts of training and policies market participants use in order to ensure that human monitors have the capability to respond to operational issues in a timely way. In particular, the Commission is interested in better understanding what training monitors receive in the rationale for the trading patterns executed by the ATS, the scope of intervention authority given to human monitors, and the procedures firms use to escalate questions or decisions from such human monitors to more senior personnel during a crisis. END FOOTNOTE
c. Crisis Management Procedures
Well-designed crisis management procedures may help to ensure that firms are prepared to conduct rapid triage in the event of a problem, including the ability to escalate decisions quickly to the proper individuals or provide notification to their clearing firms, exchanges, or the Commission. /98/ Such procedures may promote common expectations among monitoring staff, firm leadership, and exchange leadership about basic procedures in the event of market destabilizing events, facilitating more rapid intervention and mitigating the effects of an individual disruption.
FOOTNOTE 98 See SEC Roundtable Transcript, supra note 2, at 133-34. END FOOTNOTE
59. Should basic crisis management procedures be standardized across market participants? If so, what elements should be addressed in an industry-wide standard?
60. Are there specific, core requirements that should be included in any crisis management procedures? Similarly, are there specific types of crisis events that should be addressed in any crisis management procedures? If so, please identify such requirements and/or crisis events and the level of granularity or specificity that the procedures should have with respect to each.
3. Self-Certifications and Notifications
a. Self-Certification and Clearing Firm Certification
To ensure that market participants employ the pre-trade risk controls, post-trade reports and other measures, and system safeguards described herein, the Commission is inquiring whether it would be appropriate to require a periodic self-certification program for all market participants operating ATSs and for clearing firms providing services to those market participants. These certifications could refer to the extent of implementation of those risk control mechanisms discussed in the other sections of this Concept Release. With respect to ATSs, an acceptable certification might attest that: (1) The ATS contains structural safeguards to provide reasonable assurance that the trading system will not be disruptive to fair and equitable trading; (2) the market participant's ATSs have been designed to avoid violations of the CEA, Commission regulations, or exchange rules related to fraud, disruptive trading practices, manipulation and trade practice violations; and (3) such systems have been sufficiently tested and documented in a manner that is appropriate to the intended design and use of that system. Additionally, the Commission asks whether the chief executive officer, chief compliance officer, or similar ranking official of each market participant should attest to the certification. The Commission is interested in receiving comment on the costs and benefits of a certification program, what elements should be included in the program, and whether that program should be self-executed, or, if not, overseen by what authority.
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