The U.S. derivatives regulator published a long-awaited discussion paper on computerized trading, a first step to what could become new rules for a sector often blamed for market disruptions.
Seeking public comment on more than 100 topics, the Commodity Futures Trading Commission is working closely with the industry as it looks to adapt its rule-book to new technologies such as ultra-fast trading.
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"Traditional risk controls and safeguards that relied on human judgment and speeds must be reevaluated in light of new market structures," the agency said on Monday.
A raft of glitches have plagued financial markets in the past few weeks, most notably when thousands of stocks listed on Nasdaq OMX Group's were paralyzed for three hours last month because of a technological problem.
The CFTC's Technology Advisory Committee, which groups together regulators and industry participants, will discuss the report at a meeting on September 12.
High-frequency trading uses so-called algorithmic software that can post orders in fractions of a second without human intervention, and is a favored tool of hedge funds and other institutional traders.
The practice accounted for more than 60 percent of the entire volume of futures trading in 2012 on U.S. exchanges such as CME Group and IntercontinentalExchange, according to industry research group The Tabb Group.
(Reporting by Douwe Miedema; Editing by Jeffrey Benkoe and Tim Dobbyn)