[This message was posted by James Crosson of FIX Flyer LLC <[email protected]> to the "US Regulations" discussion forum at http://fixprotocol.org/discuss/48. You can reply to it on-line at http://fixprotocol.org/discuss/read/f4329f57 - PLEASE DO NOT REPLY BY MAIL.]
K. Manesh, In most cases your assumption of #5 - "The who bought the application..." is correct. Any mature organization will have trade-loss provisions in licensing and contract terms, providing indemnity against any system/algorithm that result in losses in the marketplace. Even in the event a trade-loss provision is not included with a system license, the user wouldn't have a leg to stand on when pursuing the vendor for losses. The reality is that the provider of the system does not have any exposure to the up-side of trading (ie. will not have the ability to increase revenue if the software is used to create market gains), and thus cannot plausibly be responsible for the down-side of trading. In the event of application problems resulting in substantial losses, the user of the system could, and likely should, cancel their license/contract for the algorithm and/or system used. Any charges of breach-of-contract, however, would be limited to the costs of the application and can't be linked to market performance. Hope this helps, James Crosson Vice President, Operations FIX Flyer, LLC. > Hi All, > > In the context of an Computer Algorithim placing an Order and receiving its > Trades using a FIX session where there is no human action involved in order > creation, (humans just watch the status / performance of this Order > dynamically), if something goes wrong in the algorithim (software bug) which > leads to unwanted market activity in violation of some SEC law, who is held > responsible? Is it:- > > 1. The Systems analyst who wrote the requirements specification. > > 2. The Technology architect who designed the application. > > 3. The programmer who wrote the code. > > 4. The tester who failed to find the bug. > > 5. The user who bought this application and connected it to a broker / market. > > Common sense says it must be "5. The user", please share your views. > > I once asked this question in a FIX project meeting, a senior manager said "I > dont know what SEC does, we all shall definetly loose our jobs. So don't ask > stupid questions to which we may not have answers. All of you make sure you > do your respective roles fully and properly". > > Regards, > K. Mahesh [You can unsubscribe from this discussion group by sending a message to mailto:[email protected]] -- You received this message because you are subscribed to the Google Groups "Financial Information eXchange" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/fix-protocol?hl=en.
