CFTC Scrutinizes Wash Trades

paul-zubulake
Paul Zubulake, Aite Group

In its wide-ranging look at high-frequency trading, direct market access (DMA) and the technology of trading, during a recent four-hour hearing, the Technology Advisory Committee (TAC) of the US Commodity Futures Trading Commission (CFTC) identified that the practice of "wash trades" will likely require further scrutiny.

A "wash trade" can occur when a trader, an algorithm or algorithms acting on behalf of an institution buys and sells the same amount of the same security at the same price at

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