[This message was posted by Mahesh Kumaraguru of <[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/021a4ccf - PLEASE DO NOT REPLY BY MAIL.]
Thanks James, would you be able to reccomend a website / discussion forum / blog where securities trading laws including their ethical / moral aspects can be discussed. Presently there is a "political debate" going on in General Q/A http://fixprotocol.org/discuss/read/4cc24e7c and many feel that a technical discussion forum is not the right place to discuss these topics. I have requested FIXProtocol.org webmasters to create a discussion forum to discuss non technical aspects of electronic trading http://fixprotocol.org/discuss/read/a9fb17b0 like international regulations. > 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.
