October 15, 2021

Volume XI, Number 288

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CFTC Staff Issues Research Report on Impact of Automated Orders in Commodity Futures Markets

On March 27, the Commodity Futures Trading Commission’s Market Intelligence Branch in the Division of Market Oversight (DMO) issued a report analyzing the entering of manual and automatic orders in commodity futures markets in the United States to determine how technological change is affecting futures trading. DMO staff used internal CFTC transactional data for 30 futures contracts during the period January 2013 – December 2018, and examined what effect the order placement mechanism had on the respective transaction.

The research produced the following findings:

  • the percentage of automated orders has increased in all futures markets;

  • automated orders are smaller in size than manual orders and their resting times are shorter than the resting times of manual orders;

  • automated orders are typically limit orders; and

  • while automation of orders increased steadily each year, historical volatility of end-of-day prices did not exhibit the same trend.

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume IX, Number 88
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About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm
Partner

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.

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312-902-5372
Associate

Leonard Licht is an associate in the Financial Services practice. He advises a broad range of financial market participants, including investment managers to private funds and investors in private funds. Prior to joining Katten, Lenny practiced as a corporate and securities attorney and has also worked in an analytical capacity with a family office.

While in law school, Lenny was a Heyman scholar and member of the Moot Court Honor Society.

212-940-6587
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