61. How often should a market participant certify that their pre-trade risk controls, post-trade reports and other measures, and system safeguards meet the necessary standards?
62. Which representative of the market participant should be required to attest that the certification standards have been met? Should it be the market participant's chief executive officer, chief compliance officer, or similar high-ranking corporate official, or some other individual?
63. Which entity(ies) should receive certifications from market participants? For example, should it be the market participant's clearing firm, its designated self-regulatory organization (if applicable), one or more trading platforms, a registered futures association, the Commission, or other entity?
64. Should DCMs, SEFs or clearing member firms be required to audit market participant certifications? What would be covered in an audit and how often should these audits occur? Should the same entity that receives the certification be required to perform the audit?
b. Risk Event Notification Requirements
The Commission also seeks information as to whether it would be beneficial for market participants operating ATSs to notify one or more of trading platforms, their clearing firms, the Commission, or others of risk events. /99/ Entities receiving notifications could, when they deem it appropriate based on the magnitude of a single event or a pattern of smaller related events, review further with the market participant to remedy the underlying cause(s) of the risk event. Such reviews would allow market participants, clearing firms, trading platforms, and the Commission to respond and proactively reduce risk in automated trading environments.
FOOTNOTE 99 The
The Commission seeks comment on the types of risk events that should be reported. For example, reportable risk events generally could include any instances where design parameters of an ATS are violated and where risk control processes or technologies do not function as anticipated, regardless of whether these events lead to error trades or market destabilization. Violated design parameters and unanticipated lapse of risk management processes and technology create conditions that may presage future malfunctions, even absent a current disruption.
65. Do commenters believe that risk event notifications would help to better understand and ultimately reduce sources of risk in automated trading environments? What information should be contained in a risk event notification to maximize its value?
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