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FIA PTG responds to SEC interest in Drop Copy Mechanism

FIA PTG responds to SEC interest in Drop Copy Mechanism

5 February 2013 1:00am EST

Representatives of several member firms of the FIA Principal Traders Group met with the Securities and Exchange Commission in November to discuss issues related to risk management and market integrity.

In response to questions raised by SEC staffers at that meeting about the use of "drop copies" as a risk management mechanism, the association followed up in February with a letter discussing in detail the function and value of drop copies.

FIA PTG explained in the letter that drop copies are provided by exchanges and other trading venues and consist of copies of trade reports and in some cases order messages as well. Trading firms typically use these copies to compare against internal records and confirm the accuracy of the trading information in their systems. The letter explained that drop copies can be a valuable risk management tool and highlighted some of the key features of drop copy services offered by exchanges.

The full letter to the SEC is available here. 

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FIA-PTG-Drop-Copy-Letter_020413.pdf (797.74 KB)

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