Hedge Fund Law Report Publishes Akin Gump Series on Automated Trading Strategies

The Hedge Fund Law Report has published the two-part series “Managing the Machine: How Hedge Fund Managers Can Examine and Document Their Automated Trading Strategies,” written by three members of the litigation practice at Akin Gump: Douglas Rappaport, partner, Patrick Mott, counsel, and Elizabeth Rosen, associate.

The articles examine compliance procedures involving quantitative/systematic trading, including some high-level steps for legal and compliance professionals “to jumpstart the process of designing and implementing a control framework tailored to a hedge fund manager’s particular [automated trading] program that will stand up to regulatory scrutiny.”

The authors suggest the following steps, which they describe as “a jumping-off point for legal and compliance personnel to think about more specialized, finely tailored compliance policies”:

  • conduct a thorough assessment of the risks associated with a firm’s AT strategies;
  • document the strategy and design of the AT system;
  • establish protocols for continuous monitoring of trading activity;
  • create a written policy framework for reviewing, testing and documenting new code or changes to existing code; and
  • review disclosures for consistency with practice.

To read both article installments, please click here.

For an Akin Gump client alert on this topic, please click here.