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Rules and Regs

SEC Quashes Nasdaq Proposal

Nasdaq OMX, on the verge of creating a stock exchange for small companies, was dealt a setback by the Securities and Exchange Commission over a plan to ask issuers to pay market makers for quoting.

Top Predictions for 2012

As regulators start to press their agendas for the coming year, Traders Magazine asked some industry experts what they expect to be the biggest regulatory and market structure issues of 2012. Here are their responses:

NYSE's Sub-Penny Quandary

An NYSE Euronext proposal to permit its members to quote in sub-pennies is proving highly controversial. The exchange operator's "Retail Liquidity Program" would create dark pools at the New York Stock Exchange and NYSE Amex, where members could vie for retail order flow with quotes only a tenth of a cent better than the market's best displayed prices.

SEC Beefs Up Trading Enforcement

The Securities and Exchange Commission's market structure crimes unit is hiring a group of non-lawyer trading specialists to aid in its investigations. Daniel Hawke, chief of the two-year-old Market Abuse Unit of the SEC's Division of Enforcement, said recently that the new Analysis and Detection Center would complement the unit's legal firepower when ferreting out illegal or harmful trading strategies.

Market Makers Eye Volcker Rule

The Volcker rule as currently written will affect market making on equities trading desks by limiting their abilities to facilitate trading. Subsequently, this will raise trading costs and hinder liquidity, sources tell Traders Magazine.

Ex-SEC Official Joins Law Firm

Jamie Brigagliano, a former co-acting director of the Division of Trading and Markets at the Securities and Exchange Commission, joined Sidley Austin as a partner in the firm's securities and futures regulatory practice.

News Often Triggers Trading Halts

IOI Proposal Draws Mixed Reviews

A rule proposed by the Financial Industry Regulatory Authority that could limit broker-dealers' usage of indications of interest drew mixed reviews from those who submitted comment letters to the regulator.

Message Traffic Fee Debate Rages

Despite complaints from brokers over soaring levels of market data, officials from some of the leading exchanges indicated they weren't enthusiastic about slamming on the brakes.

Trader Asks SEC to Look At Rule

Peter Driscoll, a senior trader with the Northern Trust Co. and a former chairman of the Security Traders Association, has asked the Securities and Exchange Commission to reconsider its approval of a controversial New York Stock Exchange rule governing trading ahead, or front-running.

Real-Time Reporting Ignites Debate

Much of the industry is firmly opposed to real-time reporting of a new consolidated audit trail, but regulators continue to hint that a real-time component might still be included when the Securities and Exchange Commission rolls out its CAT proposal in the next few months.

New Front-Running Rule Change

Recent rule changes by the exchanges operated by NYSE Euronext have some on the buyside worried about front-running by their brokers. In September, the New York Stock Exchange, NYSE Amex, and NYSE Arca all changed their rules that prohibit trading ahead, or front-running, to mirror those of the Financial Industry Regulatory Authority.

Circuit Breakers Get Refreshed

Exchanges and the Financial Industry Regulatory Authority, under federal guidance, have proposed updated marketwide circuit-breaker parameters.

Market Makers Under Fire From SEC

The Securities and Exchange Commission is considering rules that could limit trading by market makers during topsy-turvy markets. Speaking at an industry conference last month, David Shillman, an associate director in the SEC's Division of Trading and Markets, told attendees the regulator was mulling the imposition of "negative obligations" on dealers in certain circumstances.

Volcker Rule a 'Challenge': FINRA

Making sure brokers are in compliance with the proposed Volcker Rule is not going to be easy, according to an official with the Financial Industry Regulatory Authority.

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