The CFTC voted to establish a new sub-committee of the Technology Advisory Committee (TAC) - the Subcommittee on Automated and High Frequency - whose mission it will be to focus on High Frequency Trading ["HFT"].  The Commission is seeking nominations for members - there are about 20 spots to fill. Chairing the subcommittee will be Andrei Kirilenko, Chief Economist, with additional Commission staff members serving as coordinators for Subcommittee working groups. Commissioner Scott O’Malia, who chairs TAC, said the subcommittee will develop recommendations toward defining high frequency trading in the context of the larger universe of automated trading.  This definition is anticipated to serve as an initial step towards assessing the presence and impact of HFT in CFTC-regulated markets for consideration of appropriate regulatory and policy responses. Since its inaugural meeting, TAC has focused principally on automated trading, the most important technological evolutions in trading behavior.  This shift in terms of speed and volume has challenged all regulators' ability to ensure market integrity and safeguard against market misfires, such as flash crashes.  The subcommittee divide into 4 separate working groups, each tasked with identifying specific issues associated with automated trading.

• Group 1. Will define HFT within the context of automated trading systems.
• Group 2. Will examine whether or not there should be multiple categories of HFT - it will examine distinctions in trading activity and how such distinctions should be tagged by the exchanges.
• Group 3. Will focus on oversight, surveillance and economic analysis, to understand how HFTs behave as compared to other automated systems.
• Group 4. Will address market micro structure issues to identify possible disruptions that might be provoked by automated trading systems and potential solutions to mitigate such events.

For further details:  [CFTC PR 6178-12, 2/9/12].