A journey through the history of futures and derivative markets regulation

DERIVATIVE trading technology has exploded in sophistication since the Great Financial Crisis, thanks to algorithms and electronic execution. The futures open outcry market is becoming a distant memory, but whether we have a regulatory environment that can effectively deal with an algo-driven execution world is not clear.

Enhancements in technology are increasingly affecting trading behaviour, yet the pandemic market crisis of March 2020 generated a wake-up call on issues of liquidity and market plumbing and the set of regulations that traders navigate to take and provide liquidity.

In a crisis, the nexus of technology, rules, and regulations might fail investors who need liquidity to minimise their cost of dealing with an adverse market environment.