FINRA and NYSE Regulation Announce Agreement With Ten U.S. Exchanges to Strengthen Surveillance, Investigation and Enforcement to Prevent Insider Trading
Washington, DC and New York — The nation's primary self-regulatory organizations for the securities industry - the Financial Industry Regulatory Authority (FINRA) and NYSE Regulation, Inc.- today announced an agreement with ten U.S. exchanges to strengthen investor protection by consolidating the surveillance, investigation and enforcement of insider trading in equity securities.
Under the agreement, each exchange gives responsibility for the detection of insider trading to FINRA for Amex- and NASDAQ-listed securities and to NYSE Regulation for New York Stock Exchange- and NYSE Arca-listed securities, no matter where trading occurs in the United States.
Market centers participating in the agreement, which has been filed with the Securities and Exchange Commission (SEC) for approval, are the American Stock Exchange, the Boston Stock Exchange, the CBOE Stock Exchange, the Chicago Stock Exchange, the International Securities Exchange, the NASDAQ Stock Market, the National Stock Exchange, the New York Stock Exchange, NYSE Arca, the Philadelphia Stock Exchange and FINRA.
"This breakthrough agreement will allow NYSE Regulation and FINRA to implement across markets their state of the art insider trading surveillance and investigation programs for all listed securities in the United States," said Richard G. Ketchum, chief executive officer of NYSE Regulation, Inc. and chairman of FINRA's Board of Governors. "A focused, consolidated review strengthens our ability to prevent anyone from profiting from insider information."
"While U.S. equity markets have always coordinated very well with each other to detect and investigate insider trading, this agreement takes insider trading surveillance to a new level because it consolidates within FINRA and NYSE Regulation what used to be 11 discreet programs at each market center," said FINRA Senior Executive Vice President Stephen Luparello. "As a result, potential insider traders, whether acting alone or in concert with others, and regardless of where they trade in the U.S., will be more readily identified in this new, more unified structure."
Currently, each exchange conducts its own regulatory insider trading program and relies upon cooperation with other exchanges when potential insider trading is detected. Both FINRA and NYSE Regulation operate highly sophisticated surveillance programs to identify potential insider trading on a real-time basis. When suspect trading activity is identified, regulatory staff conducts an in-depth review using advanced analytical tools, news reports and other sources of information.
The agreement was made pursuant to Section 17(d) of the Securities and Exchange Act of 1934, Section 15 U.S.C. §78q(d), and SEC Rule 17d-2, that allows the SEC to approve plans for the allocation of regulatory responsibility among self-regulatory organizations.
FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, 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 and enforcing 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 registered firms. For more information, please visit our Web site at www.finra.org.
About NYSE Regulation
NYSE Regulation, Inc. is a not-for-profit corporation dedicated to strengthening market integrity and investor protection. NYSE Regulation is a subsidiary of NYSE Euronext (NYSE Euronext: NYX) with a board of directors that is comprised of a majority of directors unaffiliated with any other NYSE board. As a result, NYSE Regulation is independent in its decision-making. The organization consists of three divisions: Market Surveillance, Enforcement and Risk, and Listed Company Compliance. NYSE Regulation protects investors by enforcing marketplace rules and federal securities laws. NYSE Regulation also ensures that companies listed on the NYSE and on NYSE Arca meet our financial and corporate-governance listing standards. For more information, visit our Web site at www.nyseregulation.com.