FIA PTG encourages the CFTC to reject the proposed ICE Futures U.S. Rule Change Introducing Passive Order Protection

13 March 2019

In a letter submitted to the CFTC today, FIA PTG encouraged the Commission to reject ICE Futures U.S.’s proposed Passive Order Protection (“Speed Bump”). FIA PTG said that introducing any speed bumps - let alone asymmetric ones - into our futures markets is not only novel, but raises significant concerns. FIA PTG is concerned the proposed speed bump will:

  1. harm market quality, including execution quality, price discovery, and liquidity;
  2. increase market fragility during volatile market conditions and contribute to market disruptions;
  3. give a misleading impression of what firm quotes are available in the market and create fleeting or potential illusory liquidity;
  4. allow bad actors to display quotes that they do not intend to execute and facilitate market manipulation schemes, including spoofing, by creating mechanisms to easily pull quotes out of the way of incoming orders;
  5. add unnecessary complexity to the market;
  6. present discrimination issues between different types of market participants; and
  7. create an unlevel competitive playing field.

While FIA PTG supports innovation, they believe that speed bumps present a tremendous threat to the function, fairness and stability of markets. Because of these concerns and the proposal’s inconsistency with the Commodity Exchange Act and CFTC regulations, they asked that the Commission reject the proposed rule change introducing Passive  Order Protection functionality.