BRUSSELS (23 March 2012) - FIA European Principal Traders Association (FIA EPTA) looks forward to the draft report on the proposed revision to the Markets in Financial Instruments Directive (MiFID) and the proposal for the Markets in Financial Instruments Regulation (MiFIR) by MEP Markus Ferber. FIA EPTA fully supports the European Commission’s stated objective in these proposals of safeguarding the efficient functioning and integrity of markets.

“We strongly believe that regulation should be about the safe and sound functioning of markets and should promote transparency. We also believe that a level playing field for all market participants is essential to the proper functioning of markets. We support proposals that will strengthen the working of the market and believe that all investment firms, whether engaged in automated trading or not, should be required to have in place systems and controls to minimise the risks of trading,” Remco Lenterman, chairman of FIA EPTA, said.

“We would however be concerned by any proposals that could undo the good work to date on regulatory reforms -- such as the introduction of minimum resting periods, which could result in a decrease in liquidity by hampering effective risk management. We will continue to engage constructively with the European Parliament and all other political stakeholders in the interest of achieving better financial regulation for the benefit of all,” Mr Lenterman said.

FIA EPTA believes that automated trading technology has been pivotal in improving market quality over the last decade. Academic research shows that it has increased liquidity, lowered spreads, reduced the cost of trading and enhanced market efficiency. As a result of automated trading technology, post-trade costs have gone down by over 50% and volatility has been dampened. Automated trading technology has proven its social utility by transferring risk in capital markets in a more effective and efficient way as well as lowering the costs of accessing of capital markets for corporates and issuers.

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"These recommendations draw on the extensive experience that our member firms have in the field of electronic trading," said Don Wilson, chairman of the FIA PTG. "Through these recommendations, we are providing a framework that all principal traders can use to mitigate risk across the entire software lifecycle. We also hope that this paper will provide regulators with a better understanding of the types of software development and change management processes and controls that are in place at our member firms." 

"Managing the development, testing and deployment of trading applications and technology infrastructure is a complex and dynamic process," said Remco Lenterman, chairman of the FIA EPTA. "Proper application of these best practices will reinforce the role of our member firms as responsible market participants. We are committed to business practices that are consistent with relevant regulatory obligations and risk management requirements." 

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FIA EPTA Response to Ferber Questionnaire: Cover Letter 
FIA EPTA Response to Ferber Questionnaire: Detailed Responses