Statement of Commissioner Dawn D. Stump on the Certification of ICE Futures U.S., Inc. Submission No. 19-119

May 15, 2019

ICE Futures U.S., Inc. (“IFUS”) seeks to implement new Passive Order Protection (“POP”) Functionality in its Gold Daily and Silver Daily futures markets.[1]  It has submitted the POP Functionality, or “speed bump,” to the Commission pursuant to the self-certification provisions of Sections 5c(c)(1)-(3) of the Commodity Exchange Act (“CEA”)[2] and Commission Regulation 40.6.[3] 

I strongly support the Commission’s self-certification process.  Pursuant to that process, an exchange – as a self-regulatory organization responsible for the operation of its own markets – can implement a new or amended rule (which includes, among other things, trading protocols and terms and conditions[4]) on a prompt basis (generally 10 business days or, in some cases, an additional 90 days) if:  1) the exchange provides the Commission with a written certification that the change “complies with” the CEA and Commission regulations; and 2) the Commission does not object “on the grounds that it is inconsistent with” the CEA or Commission regulations.    

This is the first time that a futures exchange has self-certified speed bump functionality.  Commenters, including IFUS, have presented competing predictions of the anticipated effects of implementing this functionality.  Yet, no reliable data or empirical analysis actually exists.  I am unable to conclude within the bounds of the self-certification standard prescribed by the CEA that, notwithstanding IFUS’ certification of compliance, this speed bump for the IFUS Gold Daily and Silver Daily futures markets is inconsistent with the CEA or the Commission’s regulations.

That determination, however, must always be based on the specific facts and circumstances of a given market (e.g., the product, number of participants, and market depth or liquidity), and the particular attributes of the proposed speed bump (e.g., three milliseconds in this case).  IFUS, in the first instance, is responsible for determining that its trading functionality for a particular market complies with the CEA and the Commission’s regulations.  It is my expectation that if IFUS seeks to implement a speed bump in any other market, and/or on any other terms, it will self-certify that determination to the Commission pursuant to the self-certification process.[5]