An automated trading system ATS is a computer program that creates orders and automatically submits them to a market center or exchange. Automated trading systems are often used ij electronic trading in automated market centersincluding electronic communication networkstrading system in nyse dark pools tradlng, and automated exchanges. Backtesting of a trading system involves programmers running the program using historical market data in order to determine whether the underlying algorithm guiding ih system may produce the expected results.
Developers can create backtesting software to enable a trading system designer to develop and test their trading systems using historical market data to optimize the results obtained with the historical data. Although backtesting of automated trading systems cannot accurately determine future results, an automated trading system can be backtested using historical prices to see how the system theoretically would have performed if it had been active in a past market environment.
Automated trading or high frequency trading causes regulatory concerns as a contributor to market fragility. The use of high-frequency trading HFT strategies has grown substantially over the past several years and drives a significant portion of activity on U. Although many HFT strategies are legitimate, some are not and may be used for manipulative trading. Given the scale of the potential impact that these practices may have, the surveillance of abusive algorithms remains a high priority for regulators.
FINRA has reminded firms using HFT strategies and other trading algorithms of their obligation to be vigilant when testing these strategies pre- and post-launch to ensure that the strategies do not result in abusive tradihg. FINRA continues to be concerned about the use of so-called "momentum ignition strategies" where a market participant attempts to trading system in nyse others to trade at artificially high or low prices. Examples of this activity include layering and spoofing strategies where a market participant places a nonbona fide order on one side of the market typically, but not always, above the offer or below the bid in an attempt to bait other market participants to react to the non-bona fide order and trade with another order on the other side of the market.
FINRA also continues to focus concern on the entry of problematic HFT and algorithmic activity nyde sponsored participants who initiate their activity from outside of the United States. In recent years, there have been a number of algorithmic trading malfunctions that caused substantial market disruptions. These raise concern about firms' ability to develop, ttrading and effectively supervise their automated systems. The Financial Industry Regulatory Authority FINRA has stated that it will assess whether firms' testing and controls related to algorithmic trading and other automated trading strategies and trading systems are adequate in light of trading system in nyse U.
Securities and Exchange Commission and firms' supervisory obligations. This assessment may take the form of examinations and targeted traving. Firms will be required to address whether they conduct separate, independent and robust pre-implementation trafing of algorithms and trading systems and whether the firm's legal, compliance and operations staff are nysf the design and development of the algorithms and trading systems for compliance with legal requirements.
FINRA will review whether ynse firm actively monitors and reviews algorithms ttrading trading systems once they are placed into production systems and kn they have been modified, including zystem and controls used to detect potential trading abuses such as wash sales, marking, layering and momentum ignition strategies. From Wikipedia, the free systeem.
Commodity Futures Trading Commission. This supports regulatory concerns about the potential drawbacks of automated trading due to operational and transmission risks and implies that fragility can arise in the absence of order flow toxicity. Retrieved from " rusrock-leg.ru? Not bus forex in Talk Contributions Create account Log in. Main page Contents Featured content Current events Random article Donate to Wikipedia Wikipedia store. Help About Wikipedia Community portal Recent changes Contact page.
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An automated trading system (ATS) is a computer program that creates orders and automatically submits them to a market center or exchange. Automated trading.
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