As I wrote here last week, the Commodity Futures Trading on November 4 approved a supplemental notice of proposed rule-making (SNPRM) regarding Regulation Automated Trading, initially proposed during November 2015. The supplemental proposal includes a volumetric threshold designed to reduce the potential number of possible AT Persons; a change to the definition of direct electronic access; a new process for the CFTC to request access to source code through special calls; and a methodology for AT Persons to delegate somewhat the of testing algorithmic trading systems to third parties that control such systems. (Click here for details in the article, “Proposed Regulation AT Amended by CFTC; Attempts to Reduce Universe of Most Affected to No More Than 120 Persons” in the November 7, 2016 edition of Bridging the Week and here to access the November 11, 2o16 Advisory, “CFTC Approves Supplemental Proposal to Regulation AT” by Katten Muchin Rosenman LLP.) Under the volumetric test as proposed, an existing registrant would not be considered an AT Person (and thus subject to most of the pre-trade risk controls and systems development and testing requirements), or a non-registrant required to register as a Floor Trader (and thus become an AT Person) unless they engaged in 20,000 contracts for such person’s own account, the account of customers, or both, on average during each trading day during the prior six-month counting period. However the daily volume appears to be computed, as proposed, on the basis of total contracts traded on the electronic trading facilities of designated contract markets regardless of whether they originated through algorithmic trading or otherwise. This does not seem consistent with the purpose of the proposed limitation. Likewise, because of the revised definition of DEA, it appears possible that affiliates (e.g., foreign brokers) of certain existing registrants that might be deemed AT Persons (e.g., futures commission merchants) might have to register as Floor Traders (and also be AT Persons) if they engage in algorithmic trading for their own account and route orders through FCMs electronically to DCMs even if they exceed the volumetric threshold only because the combination of their customer and proprietary orders exceed the volumetric threshold. This also, hopefully, is a drafting ambiguity. Bottom line: it’s important for persons that may have issues with specific provisions of the SNPRM to file timely comment letters with the CFTC and not simply assume that, because of the pending inauguration of Donald Trump, that Regulation AT will simply go away. It likely won’t – at least not in full!