Futures Industry Association

The Futures Industry Association (FIA) is a trade association in the United States composed of futures commission merchants. A futures commission merchant is analogous to a broker; they are entities that accept orders and payment for commodity futures for execution on a futures exchange.[1] The FIA states that it believes its regular members are responsible for more than 80% of the customer business transacted on US futures exchanges.[2]

Futures Industry Association Principal Traders Group (FIA PTG)

The FIA Principal Traders Group (FIA PTG) is a forum for firms trading their own capital[3] to identify and discuss issues confronting their community. While FIA PTG members do not all trade in the same way, many of them rely on automated trading technology and high-speed connections to exchanges,[4] providing a service to market participants by making investing more autonomous, transparent, faster and much less expensive, according to experts and studies.[5][6]

The FIA PTG is a group affiliated with the Futures Industry Association (FIA), the trade organization for the futures, options and OTC cleared derivatives markets.[7] Membership in the FIA PTG is limited to firms that trade for their own account, known as principal traders, rather than on behalf of customers. The FIA PTG membership page maintains the most up-to-date list of current members.[8]

FIA and the FIA PTG have designed a number of reports offering specific guidance to electronic trading firms regarding risk management and best practices. These market safety and soundness recommendations for industry participants have become the de facto standards for some firms.[9] The recommendations have been cited by exchanges such as the IntercontinentalExchange (ICE)[10] and the CME Group[11] and regulators, including the Commodity Futures Trading Commission’s Technology Advisory Committee, as “an excellent guide” to preserving the integrity of markets.[12] These reports include:

•Market Access Risk Management Recommendations (April 2010)[13]

•Recommendations for Risk Controls for Trading Firms (November 2010)[14]

•Software Development and Change Management Recommendations (March 2012, in conjunction with the FIA European Principal Traders Association)[15]

The FIA PTG was created to articulate the role of principal traders to policy makers and the public. This includes defining common positions on public policy issues, advancing the group’s collective interests through the FIA, explaining the group’s views to policymakers, speaking to media and issuing research. The organization will also work to improve the public’s understanding of the constructive role played by principal trading groups in the exchange-traded derivatives markets, and promote cost-effective, equal and transparent access to markets.[16][17]

The trading activities and strategies of principal trading firms can vary depending on trading objectives and the structure of the markets in which they participate.[18] Firms engage in automated, manual and hybrid methods of trade generation and execution encompassing various strategies and are active in cash and derivatives in a variety of asset classes, such as equities, foreign exchange, commodities and fixed income.[19] Principal traders have a vested interest in well-functioning markets with effective risk controls, clear error trade policies that focus on trade certainty, and a strong regulatory framework.[20]

References

  1. ↑ "CFTC Glossary". Cftc.gov. Retrieved 2013-03-01.
  2. ↑ FIA Website 'About FIA'
  3. ↑ Lambert, Emily (2010-08-17). "High-Frequency Traders Get A New Name". Forbes.
  4. ↑ "FIA PTG Hearing Statement". Futures Industry Association.
  5. ↑ "Equity Market Trading in Europe: The Case for Refinement Over Revolution". BlackRock.
  6. ↑ Tabb, Larry (2012-12-28). "Mergers That Benefit Market Structure". The New York Times.
  7. ↑ Lambert, Emily (2010-08-17). "High-Frequency Traders Get A New Name". Forbes.
  8. ↑ https://ptg.fia.org/membership-2
  9. ↑ Chapman, Peter. "Cover Story: Glitch!". Traders Magazine.
  10. ↑ https://www.theice.com/publicdocs/circulars/12018%20attach.pdf
  11. ↑ Weitzman, Hal. "Infinium fined $850,000 for computer malfunctions". Financial Times.
  12. ↑ "Compilation of Existing Testing and Supervision Standards, Recommendations and Regulations". CFTC.
  13. ↑ http://www.futuresindustry.org/downloads/Market_Access-6.pdf
  14. ↑ http://www.futuresindustry.org/downloads/Trading_Best_Practices.pdf
  15. ↑ http://www.futuresindustry.org/downloads/Software_Change_Management.pdf
  16. ↑ Lambert, Emily (2010-08-17). "High-Frequency Traders Get A New Name". Forbes.
  17. ↑ Schmerken, Ivy. "FIA Principal Traders Group Hires Overdahl As Spokesman". Advanced Trading.
  18. ↑ "The fast and the furious". The Economist. 2012-02-25.
  19. ↑ Rosenbush, Steve. "More Asset Classes to See High-Frequency Trading". Institutional Investor.
  20. ↑ http://www.futuresindustry.org/downloads/Trading_Best_Practices.pdf