The Financial Industry Regulatory Authority will start asking brokers to give it a deposit if they want to quote on the regulator’s Alternative Display Facility, or ADF.
Under a proposal, FINRA would require brokers to submit the deposit in five equal installments into an escrow account at a mutually agreed upon bank. If the brokers did not quote in sufficient amounts over a two-year period, they would lose some or all of the deposit.
In the proposal filed with the Securities and Exchange Commission, FINRA states that the monies are needed to complete a technological upgrade of the 11-year-old system. Because of requests from brokers, FINRA has agreed to accelerate the deployment of an improved ADF, but only if the brokers agree to help finance the upgrade.
Demand for ADF membership is strong from certain large brokers due to changes made at the National Stock Exchange that made it unprofitable for them to quote at the exchange.
The SEC must approve the proposal.
