Regulatory Notice 14-28

SEC Approves FINRA Rule Concerning Self-Trades

Effective Date: August 25, 2014

 

Executive Summary

The SEC approved new supplementary material to FINRA Rule 5210 (Publication of Transactions and Quotations) to address transactions in a security resulting from the unintentional interaction of orders originating from the same firm that involve no change in the beneficial ownership of the security (self-trades). Effective August 25, 2014, firms must have policies and procedures in place that are reasonably designed to review trading activity for, and prevent, a pattern or practice of self-trades resulting from orders originating from a single algorithm or trading desk, or related algorithms or trading desks. This Notice describes the new rule, including firms’ obligations regarding self-trades and under what circumstances algorithms or trading strategies are presumed to be “related” for purposes of the rule.

 

The new rule text is available in the online FINRA Manual.

 

Questions concerning this Notice should be directed to Brant Brown, Associate General Counsel, Office of General Counsel, at (202) 728-6927.