This Notice provides information to assist market participants in understanding the short sale volume data published on FINRA’s website. FINRA is aware that some market participants, including investors, may occasionally perceive the percentage of short sale volume to be unusually high or inconsistent with reported short interest data. This perception may cause market participants to draw inaccurate conclusions about the level or nature of short selling activity in the relevant security. FINRA is issuing this Notice to further explain the published short sale volume data and provide several key points for market participants to consider when evaluating the data.
FINRA Regulatory Notice 19-18 FINRA Provides Guidance to Firms Regarding Suspicious Activity Monitoring and Reporting Obligations
FINRA is issuing this Notice to provide guidance to member firms regarding suspicious activity monitoring and reporting obligations under FINRA Rule 3310 (Anti-Money Laundering Compliance Program).
FINRA Regulatory Notice 19-17 FINRA Requests Comment on Proposed New Rule 4111 (Restricted Firm Obligations) Imposing Additional Obligations on Firms with a Significant History of Misconduct
As part of FINRA’s ongoing initiatives to protect investors from misconduct, FINRA is requesting comment on proposed new Rule 4111 (Restricted Firm Obligations) that would impose tailored obligations, including possible financial requirements, on designated member firms that cross specified numeric disclosure-event thresholds. These thresholds were developed through a thorough analysis and are based on the number of events at similarly sized peers. The member firms that could be subject to these obligations, while small in number, present heightened risk of harm to investors and their activities may undermine confidence in the securities markets as a whole. The proposal would further promote investor protection and market integrity and give FINRA another tool to incentivize member firms to comply with regulatory requirements and to pay arbitration awards.
Cboe Options Regulatory Circular 19-018 Consolidated Audit Trail Registration Deadline, Technical Specifications and Other Events
This Regulatory Circular is being issued to remind Members and Trading Permit Holders of certain Consolidated Audit Trail (CAT) related requirements and initiatives, as well as upcoming dates to keep in mind.
Several member firms have recently notified FINRA that they have been victims of imposter websites—which are sites designed to mimic a firm’s actual website with the end goal of committing financial fraud. This Notice outlines steps firms can take to monitor for imposter websites and what to do if an imposter website is found.
A rule change amending various rules within Chapter 17, Discipline, of the Cboe Exchange, Inc. Rulebook was recently filed with the SEC, and will become effective May 26, 2019. As a result of the changes various processes concerning investigative and disciplinary matters involving Cboe Options and C2 Options Trading Permit Holders (“TPHs”) and persons associated with TPHs (“associated persons”) are being amended. The amended processes are generally consistent with that of the Exchanges’ affiliate exchanges. Specifically, the proposed amendments will, among other things, authorize the Exchange’s Chief Regulatory Officer (“CRO”) to initiate charges and, in certain instances, impose sanctions. The Business Conduct Committee (“BCC”) will continue to preside over a hearing on the charges. A hearing will now be held before a panel of either three or five BCC members selected by the Chairperson of the BCC (the “Hearing Panel”).
Securities and Exchange Commission Release No. 34-85723 Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Rule 7.11, Limit Up-Limit Down Plan and Trading Pauses in Individual Securities Due to Extraordinary Market Volatility
The Participants filed the Plan to Address Extraordinary Market Volatility (the “Limit Up-Limit Down Plan” or the “Plan”) with the Commission on April 5, 2011 to create a marketwide limit up-limit down mechanism intended to address extraordinary market volatility in NMS Stocks, as defined in Rule 600(b)(47) of Regulation NMS under the Exchange Act. The Plan sets forth procedures that provide for market-wide limit up-limit down requirements to prevent trades in individual NMS Stocks from occurring outside of the specified Price Bands. These limit up-limit down requirements are coupled with Trading Pauses, as defined in Section I(Y) of the Plan, to accommodate more fundamental price moves. In particular, the Participants adopted this Plan to address extraordinary volatility in the securities markets, i.e., significant fluctuations in individual securities’ prices over a short period of time, such as those experienced during the “Flash Crash” on the afternoon of May 6, 2010.
The Commission is extending the compliance date for the recently adopted amendments to Rule 606 of Regulation National Market System (“Regulation NMS”) under the Securities Exchange Act of 1934 (“Exchange Act”), which require additional disclosures by broker-dealers to customers concerning the handling of customer orders. Specifically, the Commission is extending the compliance date for the recently adopted amendments to Rule 606. Following September 30, 2019, broker-dealers must begin to collect the information required by Rules 606(a) and 606(b) as amended. The compliance date remains May 20, 2019 for the amendments to Rule 605. The Commission is extending the compliance date for the recently adopted amendments to Rule 606 in order to give broker-dealers additional time to develop, program, and test for compliance with the new and amended requirements of the rule.
The SEC approved a proposed rule change to amend FINRA Rule 4570 (Custodian of Books and Records) to: (1) provide a member firm that is filing a Form BDW (Uniform Request for BrokerDealer Withdrawal) the option of designating another FINRA member firm as the custodian of its books and records on the form; (2) clarify the obligations of the designated custodian; and (3) require the designated custodian to consent to act in such a capacity. These changes become effective on August 19, 2019.
MSRB Regulatory Notice 2019-12 MSRB Proposes to Eliminate MSRB Rule G-29, on Availability of Board Rules
The MSRB filed for immediate effectiveness a proposed rule change with the SEC to eliminate MSRB Rule G-29, on the availability of Board rules. The operative date of this proposed rule change will be June 3, 2019. Rule G-29 requires brokers, dealers and municipal securities dealers to keep in each office in which specified activities (including underwriting, trading or sales of municipal securities, among others) are conducted a copy of all MSRB rules and to make such rules available for examination by customers promptly upon request.
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