August 24, 2020

Mr. Christopher Kirkpatrick
Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st St, N.W.
Washington, DC 20581

Re: Electronic Trading Risk Principles, RIN 3038–AF04; Regulation Automated Trading; Withdrawal, RIN 3038–AD52

Dear Mr. Kirkpatrick:

The International Swaps and Derivatives Association, Inc. (“ISDA”)1 and Securities Industry and Financial Markets Association (“SIFMA”)2 appreciate the opportunity to submit these comments on the Proposed Rule: Electronic Trading Risk Principles (“Proposal”)3 published by the U.S. Commodity Futures Trading Commission (“CFTC” or “Commission”) in the Federal Register on July 15, 2020.

We fully support the Commission’s goals to prevent, detect, and mitigate market disruptions and system anomalies associated with electronic trading activities. As we have stated in the past, a principles-based approach to regulating electronic trading is more appropriate as it provides flexibility, particularly in terms of implementation and applicability, and takes into account future technological advances. We believe that the debate over principles-based versus rulesbased regulation has largely focused on these two terms while overlooking the key regulatory objective underlying the Proposal; that is, whether the proposed regulatory regime is intended to establish proper risk controls designed to mitigate potential market disruptions. In our opinion, the Proposal fulfills this objective.

The proposed principles-based approach, while currently in line with what has already been implemented by Designated Contract Markets, would expand and adjust as derivatives markets continue to experience rapid change and technological development. Unlike rule-based regulations, the proposed framework will keep up with such changes and developments, without the necessity of undergoing a lengthy rulemaking process once the regulations become outdated (and in the interim, potentially lacking proper regulatory oversight).