FIA Principal Traders Group
|Principal Traders Group (PTG)|
|Products||Lobby group formed by the FIA to represent principal traders that trade only on their own accounts|
Principal Traders Group (PTG) is a lobby group formed by the Futures Industry Association (FIA) to represent principal traders (i.e. independent proprietary trading firms that trade only on their own accounts). These firms came under heightened scrutiny for trading practices such as high frequency trading that may have contributed to Wall Street's May 6, 2010 "flash crash."
The group is chaired by Donald Wilson, the head of Chicago-based DRW Trading Group. Most of the member firms are based in Chicago. PTG appointed as its spokesperson industry veteran James Overdahl, the former chief economist for the SEC and the CFTC.
The Group's stated mission is to provide a forum for firms trading their own capital to identify and discuss issues confronting the PTG community; Define common positions on public policy issues and advance the group collective interests through the FIA; Improve public understanding of the constructive role played by the wide variety of individual trading groups in the exchange-traded derivatives markets; and Promote cost-effective, transparent access to U.S. and non-U.S. markets.
While FIA PTG members do not all trade in the same way, many of them rely on automated trading technology and high-speed connections to exchanges.
Membership in the FIA Principal Traders Group is limited to firms trading their own capital in exchange-traded markets. Principal traders are active in a variety of asset classes such as futures, equities, foreign exchange, and fixed income, and on a variety of exchanges, both in the U.S. and abroad. Trading firms engage in automated, manual and hybrid methods of trade generation and execution encompassing various strategies. Not all principal traders are high-frequency traders. The mission of the group is to provide a forum for firms trading their own capital to identify and discuss issues confronting the PTG community. In 2013, the top issues included: fair access to centrally cleared OTC markets; implementation of Dodd-Frank market structure changes; regulation and oversight of electronic trading; tax policies which impact PTGs; and communication/education on current market issues.
In June 2010, with high-frequency trading getting a lot of controversy from the public, Principal Traders Group serves as an organized means to respond to inquiries about high frequency trading and allows the member firms to identify best practices within the financial industry.
Papers and Statements
On May 1, 2013, FIA Principal Traders Group issued a response to an article in the Wall Street Journal alleging that high-frequency traders were taking advantage of a "loophole" in the CME Group's market data systems. The Principal Traders Group said they were "surprised and disappointed at the misleading article" published by the Journal. They said the article took an inherent feature of all markets out of context and distorted it, creating a false impression that the CME’s markets are fundamentally unfair. The Group praised exchanges in general for reducing latency and variability in their trading systems, saying it lead to better market quality and lower trading costs, and said that markets today are more open, transparent and efficient than they had ever been.
In August of 2012, FIA Principal Traders Group and FIA European Principal Traders Association issued a joint statement in response to the market disruptions on Aug. 1, 2012. They said their member firms shared in the concerns about the disruptions in the equity markets that resulted from Knight Capital's problems, and that they had recommended specific tests and controls trading firms should consider. They said they planned to review their recommendations once the facts about the causes of Knight Capital's problems had been revealed. 
In November 2010, PTG published a white paper entitled Recommendations for Risk Controls for Trading Firms. The paper highlights its recommended policies and procedures for trading operations and electronic trading systems in such areas as:
- Access and oversight of staff;
- Testing and error control systems;
- Pre- and post-execution risk management protections;
- Contingency plans for trading interruptions; and
- Physical and electronic security.
PTG membership is limited to firms which trade solely their own capital. Members engage in traditional, hybrid, and high-frequency trading, in an assortment of asset classes. As of 2013, in has 29 members. Member firms include:
- Allston Trading
- Bluefin Trading
- Chicago Trading Company
- Chopper Trading
- Consolidated Trading
- The DRW Trading Group
- Eagle Seven
- Flow Traders US, LLC
- Geneva Trading
- Hard Eight Futures
- HTG Capital Partners
- IMC Chicago
- Infinium Capital Management
- Jump Trading
- KCG Holdings
- Ketchum Trading
- Liquid Capital
- Marquette Partners
- Nico Holdings LLC
- Quantlab Financial
- RGM Trading
- Spot Trading
- Sun Trading
- Teza Technologies
- Tibra Trading America
- Tower Research Capital
- TradeForecaster Global Markets LLC
- XR Trading
- High-Frequency Traders Get A New Name. Forbes.
- US lobby group formed on high-frequency trade. Reuters.
- Mission. FIA.
- High frequency traders get an ally. Futures.
- Press Release. Futures Industry.
- Press Release. Futures Industry.
- Recommendations for Risk Controls for Trading Firms. FIA Principal Traders Group.