Rulemaking Items for Discussion at the September 2014 Meeting
The FINRA Board of Governors will consider the following rulemaking item at its September 2014 meeting. After the September 19 meeting, FINRA will notify firms via email about the Board’s actions on this item and anticipated next steps, if any.
Equity Trading Initiatives
ATS Order Book Information
The Board will consider a proposal to require alternative trading systems (ATSs) to provide FINRA with additional order book information in order to enhance FINRA’s surveillance and oversight of ATSs.
Expansion of ATS Transparency
The Board will consider a proposal to expand FINRA’s recently implemented Alternative Trading System transparency initiative to publish the remaining equity volume executed over-the-counter by each member firm on a stock-by-stock basis. FINRA would derive the data directly from trade reports submitted to the FINRA equity trade reporting facilities, and therefore, the proposal would not impose any additional reporting requirements on firms.
The Board will consider a proposal to exclude over-the-counter trades in NMS stocks reported more than two seconds following trade execution from the calculation of “last sale” in publicly disseminated market data. The proposal would not change a firm’s trade reporting obligations under current FINRA rules.
The Board will consider a proposal to reduce the allowable drift of member firms’ computer system business clocks from the current one second allowable drift to an allowable drift between 50 to 200 milliseconds.
OATS Non-Member Reporting
The Board will consider a proposal to require FINRA member firms to identify in their audit trail reports to FINRA when they receive orders from non-member broker-dealers, , enhancing FINRA’s surveillance ability.
Supervision of Algorithmic Trading Strategies
The Board will consider proposed guidance regarding firms’ obligations to supervise the development, testing and use of algorithmic trading strategies.
Registration of Associated Persons Involved in the Preparation of Algorithmic Strategies
The Board will consider a proposal to require registration of associated persons that develop or supervise the development of algorithmic trading strategies.
Fixed Income Market Initiatives
Fixed Income Quotation Information
The Board will consider a proposal to require Alternative Trading Systems to report to FINRA for regulatory purposes quotation information they display to their general subscriber base for certain fixed income securities.
Fixed Income Pricing Disclosure
The Board will consider a proposal to require member firms to disclose pricing information on customer confirmations for certain “matched trades” involving fixed income securities.
Identification of Transactions with Affiliated Entities in TRACE
The Board will consider a proposal to exclude from TRACE trade reports certain member firms’ transactions with non-member affiliates.
Gross Income Assessment Methodology
The Board will consider a proposal to modify the Gross Income Assessment (GIA) pricing structure for firms with annual Financial and Operational Combined Uniform Single (FOCUS) gross revenues that do not exceed $25 million.
Limited Rule Set for Retail Foreign Exchange Activities
The Board will consider a limited rule set for member firms’ retail foreign exchange activities.
Recruitment Practices Proposal
The Board will consider a revised recruitment practices proposal that would require a recruiting firm to provide an educational communication to former retail customers of a transferring representative who are considering transferring assets to that firm.
Securities Trader and Securities Trader Principal Registration Categories
The Board will consider a proposal to adopt Securities Trader and Securities Trader Principal registration categories in place of existing trader categories.