JERSEY CITY, NJ and WASHINGTON, DC — Direct Edge®, the third largest stock exchange operator in the U.S., has agreed with the Financial Industry Regulatory Authority (FINRA), the independent, non-governmental regulator for all securities firms doing business with the public in the U.S., to provide market surveillance services on behalf of Direct Edge's two licensed stock exchanges.
Under this agreement, FINRA will have surveillance oversight of more than 90% of U.S. equities trading volume. This nearly complete view of market activity will allow FINRA to expand its role as an investor guardian by identifying abusive activity across multiple markets.
Allowing for necessary technical and operational configuration changes, Direct Edge expects the new arrangement will become operative in the fourth quarter of 2013. Currently, FINRA performs examination and disciplinary services on behalf of Direct Edge. With this agreement, all of Direct Edge's third-party regulatory services will be consolidated with FINRA.
"The stock market ecosystem is tightly interconnected and its surveillance is well-served by FINRA's holistic view of the market," said William O'Brien, Chief Executive Officer of Direct Edge. "Detecting trading patterns spanning multiple exchanges and other market centers will enhance market integrity and, in turn, boost investor confidence that improper conduct and bad actors can be detected and punished."
"This agreement significantly enhances FINRA's ability to protect investors and ensure market integrity," said FINRA Chairman and Chief Executive Officer Richard Ketchum. "Our comprehensive cross-market surveillance patterns will soon cover over 90% of the listed equities market and allow FINRA to better pursue potential cross-market abuses and more quickly identify new threats to the fairness and integrity of our markets."
Direct Edge is one of the leading stock exchange operators in the United States and globally. Headquartered in Jersey City, New Jersey, Direct Edge offers dynamic trading functionality across two distinct platforms, EDGA and EDGX, as well as connectivity and market data services. Its commitment to innovation and superior customer service helps its Members move their business lives forward. In November of 2011, Direct Edge announced plans to expand internationally with the opening of Direct Edge Brazil, a Rio de Janeiro-based electronic stock exchange for the trading of Brazilian equities. Direct Edge is owned by a consortium that includes affiliates of Citadel LLC; Goldman Sachs Group, Inc.; International Securities Exchange, LLC.; JPMorgan Chase & Co.; and Knight Capital Group, Inc. More information is available at www.directedge.com and www.directedge.com.br.
FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.