116. How should risk control monitoring be implemented? Should compliance be audited by internal and external parties? For each control, please identify the appropriate entity(ies) to monitor compliance with the control. Also, please describe what an acceptable compliance audit would entail for each control.
117. Are there additional controls that should be considered, or other methods that could serve as alternatives to those described above [ See sections III.C-F]? If so, please describe the control, its costs and benefits, the appropriate entity(ies) to implement such control, and whether there is any distinction to be drawn in the case of DMA.
118. Would any of the risk safeguards create a disincentive to innovate or create incentives to innovate in an irresponsible manner? If so, please identify the control, the concern raised, and how the control should be amended to address the concern. Responses should indicate how an amended risk control would still meet the Commission's objectives.
119. Should the Commission consider any pre-trade risk controls, post-trade reports, or system safeguards appropriate exclusively to market makers or to ATSs used by market makers? If so, please describe such controls or safeguards.
120. Should the Commission or
121. Please describe the documentation (or categories of documents) that would demonstrate that a market participant operating an ATS has implemented each risk control addressed in this Concept Release, including, for example, computer code, system testing results, certification processes and results, and calculations.
122. Would a fee (collected by, for example, the DCM or SEF) on numbers of messages exceeding a certain limit be more appropriate than a hard limit on the number or rate of messages?
123. Should such a penalty be based on a specified number or rate of messages or on the ratio of messages to orders filled over a specified time period?
124. Recent disruptive events in securities markets illustrate the importance of effective communication between exchanges' information technology systems. The Commission requests public comments regarding relevant systems in its regulated markets, including both DCMs and SEFs. What data transfers or other communications between exchanges are necessary for safe, orderly, and well-functioning derivatives markets? What additional measures, if any, would help promote the soundness of such systems (e.g., testing requirements, redundancy standards, etc.)?
IV. List of All Questions in the Concept Release
Listed below are all questions raised in the preceding sections of this Concept Release.
High Frequency Trading
1. In any rulemaking arising from this Concept Release, should the Commission adopt a formal definition of HFT? If so, what should that definition be, and how should it be applied for regulatory purposes?
2. What are the strengths and weaknesses of the TAC working group definition of HFT provided above [ See section II.A.1]? How should that definition be amended, if at all?
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