#Japan #Tokyo #Algorithmic Trading #AI MQL #ClearTrace Protocol

AI MQL Launches ClearTrace Protocol (CTP) v1.0

On November 22, 2025, AI MQL LLC, based in Shinagawa, Tokyo, announced the public release of a groundbreaking standard called the ClearTrace Protocol (CTP) v1.0. This innovative protocol is designed to document decision-making processes and execution results in algorithmic trading and AI-driven trading systems in a tamper-proof and verifiable manner. As a global standard, CTP aims to address the increasing demand for transparency in financial transactions and explainability in AI processes.

Understanding the Need for CTP

In recent years, the financial market has witnessed rapid advancements in transaction speeds and automation, with AI and sophisticated algorithms at the forefront of trading strategies. However, this has led to a dilemma where the decision-making processes often become black boxes, making it difficult to retrospectively verify and explain why particular trades were executed. With international regulations such as Europe’s MiFID II and the US’s Consolidated Audit Trail (CAT) enhancing requirements for full lifecycle tracking of trades and identification of algorithms, the demand for reliable audit trails has never been more pressing.

Additionally, the exploding prop trading firm industry necessitates a reliable trail for preventing fraudulent copy trading and ensuring equitable profit distribution among traders. The ClearTrace Protocol aims to solve these industry-wide challenges and build a foundation of trust and transparency for the next generation of financial markets.

Features of ClearTrace Protocol (CTP) v1.0

CTP meticulously records every event from the generation of trading signals to order placement, execution, and settlement as causally linked “state transitions” with nanosecond precision. Its innovative features include:

1. Comprehensive Accountability for AI Trading (CTP-AI Extension)
CTP allows for the complete retrospective reconstruction of AI decision-making processes. It records not only the version of the AI model (hash value) used but also the input data (features) during inference and identifies which features contributed to the decisions (explainability metrics like SHAP/LIME values) to alleviate the black box problem.

2. Tamper-Proof and Full Compliance with International Regulations (RegTech Standard)
Utilizing hash chains and Merkle Tree technology, CTP prevents tampering of recorded audit trails mathematically, ensuring high evidential value. It provides precise timestamps and complete lifecycle tracking of orders, addressing MiFID II and CAT compliance, including rejections and cancellations.

3. High-Performance Architecture Suitable for HFT
CTP supports a “Zero-Copy/Sidecar” architecture that does not affect critical paths in order execution and employs the Simple Binary Encoding (SBE) format. This ensures it can be implemented in high-frequency trading (HFT) environments without compromising performance.

4. Detection of Fraudulent and Copy Trading (CTP-DETECT Extension)
Addressing unique challenges in the prop trading sector, CTP records device information, order similarity scores (OrderCloneScore), and time offsets (SyncDelta) to preserve evidence against suspicious copy trading, group trading, and market manipulation practices like spoofing.

Governance Structure of CTP

ClearTrace Protocol (CTP) is published under a Creative Commons license (CC BY 4.0), allowing it to be implemented royalty-free. To maintain its neutrality and transparency, it will be governed by a specialized organization called the Aegis ClearTrace Standards Committee (ACSC), which is currently under establishment.

The ACSC will invite participation from a diverse range of stakeholders, including financial institutions, prop firms, regulatory experts, and technologists, and will manage the maintenance and improvement of the specifications through a Request for Comments (RFC) process hosted on GitHub.

Future Developments

AI MQL LLC is working on spreading and implementing CTP through the upcoming establishment of Aegis ClearTrace, a business entity that will provide analysis and audit engines (Aegis Judge Engine) and certification services proving CTP compliance.

We are confident that ClearTrace Protocol will emerge as a new standard within the financial industry, contributing to the realization of a more equitable and transparent market. We eagerly anticipate the adoption of CTP across various sectors and encourage participation in the ACSC.

About AI MQL LLC

AI MQL LLC is a technology company specializing in the research and development of AI and algorithmic technologies within the financial sector. We strive to improve efficiency and enhance transparency in the financial markets through advanced data analysis and engineering solutions.

• - Company Name: AI MQL LLC
• - Location: Minato-ku, Tokyo
• - Representative: Jutaka Uemura
• - Website: https://ai-mql.com/