August 9, 2010
This submission is regarding File No. S7-11-10 Consolidated Audit Trail System Release No. 34-62174
I am a FIXProtocol Java software programmer with experience in developing and testing front end Trading applications for Buy side (Asset management), sell side (stock brokerage) and stock Exchange. Pardon my lack of extensive knowledge of securities trading laws / compliance requirements.
From what I gather from some discussions in FIXProtocol.org forums (http://fixprotocol.org/discuss/read/53ff6f4f), there are presently no requirements to record identity of the person originating an order in electronic trade messages throughout the life cycle of the trade from new order creation thru trade to settlement. Please correct me if I am wrong.
If I am correct in assuming that details of user who entered an order and system thru which this order was entered are not recorded but what gets recorded for legal / compliance requirements are the details of the entity (company / individual person) for whom the trades were done, then would it be beneficial for users of Consolidated Audit Trail System records to also know the actual source (user/system) who originated the orders, not just the entity for whom the trade was done. For example:- Lets say a portfolio manager places a trade for a client's account on instruction by client. After this trade is complete, would this Consolidated Audit Trail System be able to know details of both - the client for whom the trade was done and the portfolio manager who did the trade? I would like to propose that two new Fields
be added to the the proposed Consolidated Audit Trail System records which would aid SEC regulatory authorities to see required details and help detect order sources which violate laws / involved in market manipulation ie. I would to find ways to stop rouge trader.
I would also like you to take a look at a discussion we are having at http://fixprotocol.org/discuss/read/6dde9c9d regarding this proposal.
In the context of an Computer Algorithim named MYFIX placing an Order and receiving its Trades using a FIX session where there is no human action involved, (humans just watch the status / performance of this Order dynamically) do the SEC regulatory authorities know the actual source of this order which got traded and settled is a runtime binary named startMYFIX.class executed in commad line as
java startMYFIX cmd-line-params
Now if something goes wrong in MYFIX algorithim (software bug) which leads to unwanted market activity in violation of some SEC law, who is held responsible?