MMI Second Comment Letter to the CFTC Regarding Regulation Automated Trading

As previously stated, MMI stands in broad support of the CFTC’s proactive efforts to codify industry best practices and enforce high standards for automated trading. However, the Agency’s Proposal to move source code inspection from a judicial process to books and records provisions (Commission Regulation 1.31) unduly imperils sensitive intellectual property and violates the Fourth Amendment.

In the following comments, we include: (A) a discussion of intellectual property and the Fourth Amendment rights of source code owners; (B) a proposed regulatory treatment of source code (as an alternative to the proposed books and records treatment); and (C) information pertaining to definitions of “source code” and elements of an “algorithmic trading system.”