The Magazine for Securities Industry Professionals
Departments
Current Issue
Traders Poll
Resource Center
Reader Services
Rules and Regs
Foreign Stocks Go Real-Time
Peter Chapman
The Financial Industry Regulatory Authority, under pressure from the over-the-counter trading community, has asked the Securities and Exchange Commission for permission to report OTC trades in foreign securities in real time.
FINRA's proposed changes to NASD Rule 6620 follow a three-year campaign by Pink OTC Markets and the Security Traders Association to require it to disseminate the last-sale reports as soon as the trades are reported by dealers. Now, the regulator only reports a summary of trading activity at the end of the day.
SEC Plans To Review Reg NMS
Peter Chapman
The Securities and Exchange Commission, in the wake of industry criticism, says it will review Regulation NMS. Bob Colby, deputy director, the SEC's Division of Trading and Markets, told conference-goers at the Securities Industry & Financial Markets Association annual market structure conference last month that "we do plan to review [Reg NMS] and consider whether, given the changes in the market, it needs to stay for all time."
SEC Watching Options Take Fees
Nina Mehta
The Securities and Exchange Commission, in the wake of concerns raised by options exchanges and traders, won't permit options exchanges to charge access fees over a certain limit.
"We're certainly not fond of take fees that cross the increment," said Erik Sirri, director of the SEC's Division of Trading and Markets, referring to the minimum allowable quoting increment for options. If the fee crosses the increment, Sirri added, "that would be an issue."
FINRA Advises on Rogue Trading
Peter Chapman
Take that vacation! That recommendation is at the top of the list in a memorandum issued by the Financial Industry Regulatory Authority addressing ways to detect and prevent rogue trading.
Traders, FINRA says, should be required to take 10 consecutive trading days of vacation time so any unauthorized trades they might have made can be detected.
FINRA Targets Manning for Change
Peter Chapman
The Financial Industry Regulatory Authority recently outlined a plan to make its all-important Manning Rule look more like its counterpart at the New York Stock Exchange, Rule 92.
The move is part of a broader attempt to reduce the regulatory burden on broker-
Proposal Threatens Canadian Stocks
Peter Chapman
The Securities and Exchange Commission, in an attempt to lighten the burden on foreign issuers of unregistered securities, may in fact be driving foreign companies away from U.S. securities markets. Dually listed Canadian companies are most at risk.
That's the complaint from traders of over-the-counter securities, as well as the operator of the primary marketplace for unregistered foreign stocks, Pink OTC Markets. They applaud the SEC's efforts to relax certain requirements of Exchange Act Rule 12g3-2. But they oppose the regulator's proposal to add a new requirement to the rule that could force foreign companies to register with the SEC.
NYSE Specialists Get Break on CAPs
Peter Chapman
The New York Stock Exchange, as part of a broad-based initiative to shore up specialists' competitiveness, will permit them to trade CAP orders on parity with other orders.
Currently, specialists handling CAP, or convert-and-parity, orders for floor brokers must cede any trade to a competing DOT or other agency order at the same price. Under the exchange's proposal, CAP orders will have equal standing with DOT or other agency orders.
SEC Streamlines Filings
Peter Chapman
The Securities and Exchange Commission, stung by sharp criticism from the nation's stock exchanges and its own Office of Inspector General, will streamline its rule-approval process for self-regulatory organizations.
By June, the SEC's Division of Trading and Markets will recommend to SEC commissioners new procedures for evaluating and approving SRO rule filings.
NYSE Looks To Expand Floor Role
Peter Chapman
The New York Stock Exchange, reacting to a decline in the number of floor traders, is proposing that exchange employees be allowed to act as floor officials.
The exchange asked the Securities and Exchange Commission for permission to alter its Rule 46, which restricts the role of floor official to exchange members. Under an amendment to the rule, "qualified exchange employees" would be permitted to function as floor officials and governors along with members.
ISE Proposes New Customer Category
Nina Mehta
The International Securities Exchange's recent big win in convincing the Securities and Exchange Commission to publicly notice its request that high-frequency trading by public customers get mandatory treatment as "professional orders" came as the ISE successfully ushered a "voluntary professionals" category past the SEC.
In May 2006, the ISE asked the SEC to allow it to mandate that broker-dealer members identify orders from certain public customers as "professional orders." Those active, high-volume customers executing 390 or more trades per day (one trade per minute) would meet that definition and have their orders treated as broker-dealer orders with regard to execution priority and transaction fees. The SEC published that filing for comment in February, after a 20-month delay, and after the ISE in January filed an amendment to the original request, clarifying its plans.
SEC Expands Soft Dollar Disclosure
Peter Chapman
The Securities and Exchange Commission's new soft dollar disclosure rules, part of a proposed revision of Form ADV, will have an impact on relations between investment advisers and their customers, the experts agree. How difficult it will be for money managers to comply with the proposed changes is not as clear.
EU to SEC: No Cherry-Picking
Nina Mehta
A top official in the European Commission delegation to the United States said in February that the Securities and Exchange Commission should not "cherry-pick" European countries when making decisions about which foreign securities exchanges should be granted easier access to U.S. investors.
SEC Warns Brokers on Dark Duties
Nina Mehta
The Securities and Exchange Commission warned brokers they must ensure they're meeting their best-execution obligations by accessing both displayed and non-displayed liquidity for clients. This reminder comes in light of buyside concern over the fragmentation of non-displayed liquidity. Erik Sirri, director of the SEC's Division of Trading and Markets, said in February, "We look to brokers in general to solve the problem of fragmentation...on behalf of customers."
Sirri informed brokers that "blindly following routing strategies that may have worked in the past but no longer fit the current market structure is not an appropriate best-execution approach."
Nasdaq Prevails in Options
Peter Chapman
Nasdaq OMX, after a yearlong back-and-forth with the Securities and Exchange Commission, won the regulator's approval for its options market last month. The effort to establish the Nasdaq Options Market (NOM) was not without its setbacks. Nasdaq initially petitioned the commission for seven order types, including two controversial types. In the end, it got six, forfeiting a "non-displayed" order. Due to complaints from the American Stock Exchange and Citadel Investment Group, which operates one of the largest options market-making firms, Nasdaq dropped its request for the hidden order type.
BATS' Exchange Push
Peter Chapman
BATS Trading submitted its exchange application to the Securities and Exchange Commission in November. The ECN expects the SEC will soon publish its application for public comment, according to chief executive officer Joe Ratterman. To lead the company's efforts in its consultations with the SEC, the ECN hired Eric Swanson, based in New York, as its general counsel. Swanson worked for the SEC from 1996 to 2006, rising to assistant director in the Office of Compliance Inspections and Examinations' market oversight unit. His duties included supervising the SEC's inspection program responsible for regulatory oversight of trading on the securities exchanges and ECNs. By volume BATS is now only behind the New York Stock Exchange, Nasdaq and NYSE Arca. In December, it matched 5 percent of all NYSE-listed shares and 8 percent of all Nasdaq-listed shares.
(c) 2008 Traders Magazine and SourceMedia, Inc. All Rights Reserved.
http://www.tradersmagazine.com http://www.sourcemedia.com
Marketplace
|
©2008 Traders Magazine and SourceMedia, Inc. All rights reserved. |
|