News Release

FINRA Board Approves Series of Equity Trading and Fixed Income Rulemaking Items

For Release: 
Friday, September 19, 2014
Contact(s): 

Nancy Condon (202) 728-8379
George Smaragdis (202) 728-8988

WASHINGTON—The Financial Industry Regulatory Authority (FINRA) announced that its Board of Governors approved a series of proposed rule changes regarding high-speed and algorithmic trading.

The proposals follow FINRA's meeting today, where much of the agenda focused on high-frequency trading and equity-market transparency. The Board also approved initiatives to enhance transparency and execution quality in fixed income markets.

"FINRA's Board has acted in response to Chair White's call to action in her two landmark speeches earlier this year. The initiatives we have announced today will boost investor confidence in the fairness and transparency of both the equity and fixed income markets," said FINRA Chairman and CEO Richard Ketchum.

The Board authorized the issuance of a series of Regulatory Notices on the following regulatory initiatives:

Registration of Associated Persons Involved in the Preparation of Algorithmic Strategies. The Board authorized FINRA to issue a Regulatory Notice seeking comment on a proposal to establish a registration requirement for associated persons who are: (1) primarily responsible for the design, development or for directing the significant modification of an algorithmic strategy; or (2) responsible for supervising such functions.

Expansion of ATS Transparency. The Board approved the publication of a Regulatory Notice to solicit comment on a proposal to expand FINRA's recently implemented transparency initiative that discloses Alternative Trading System (ATS) volume to publish the remaining equity volume executed over the counter (OTC).

Clock Synchronization. The Board authorized FINRA to publish a Regulatory Notice to solicit comment on a proposed requirement that firms synchronize their computer system business clocks to the National Institute of Standards and Technology (NIST) atomic clock within an allowable drift of between 50 to 200 milliseconds.

Supervision of Algorithmic Trading Strategies. The Board authorized FINRA to publish a Regulatory Notice reminding firms of their existing supervisory obligations with regard to the development and deployment of algorithmic trading strategies.

Trade Sequencing. The Board approved the publication of a Regulatory Notice to solicit comment on a proposal to identify over-the-counter trades in NMS stocks reported more than two seconds following trade execution as "out of sequence," and therefore not "last sale" eligible, for purposes of public dissemination.

Fixed Income Pricing Disclosure. The Board authorized the publication of a Regulatory Notice requesting comment on a proposal to require member firms to provide confirmation disclosure of pricing in same-day principal trades of retail size.

Fixed Income Quotation Information. The Board authorized FINRA to publish a Regulatory Notice to solicit comment on a proposed requirement that ATSs report to FINRA for regulatory purposes information concerning the quotations they display to their general subscriber base for certain fixed income securities.

Recruitment Practices. The Board authorized FINRA to publish a Regulatory Notice soliciting comment on a proposal that would require a recruiting firm to provide a FINRA-created educational communication to former retail customers of a transferring representative who are considering transferring assets to that firm.

A full list of the rulemaking items approved by FINRA's Board is available on FINRA's website.

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.