Regulatory Notice 12-50

SEC Approves Amendments Relating to Stop Orders

Effective Date: January 21, 2013

Executive Summary

The SEC approved new FINRA Rule 5350 (Stop Orders), which replaces the stop order provisions of FINRA Rule 6140(h).  The rule provides that any order labeled as a “stop order” or a “stop limit order” must be triggered based upon a transaction at the stop price, but permits firms to offer alternative order types with different triggers (e.g., a stop order triggered by a quotation at the stop price) so long as the order type is not labeled as a stop order and is clearly distinguishable from a stop order.

 

The text of the rule can be found in the online FINRA Manual.

 

Questions regarding this Notice should be directed to:

  • Racquel L. Russell, Assistant General Counsel, Office of General Counsel, at (202) 728-8363; or
  • Scott B. Trilling, Director, Market Regulation, at (240) 386-5113.

 

Update 1/9/13: The effective date for compliance with Rule 5350 has been extended to March 4, 2013. Original Effective Date: January 21, 2013