Brian Friedman
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The recently issued Examination Priorities for 2016 reveals that the SEC’s priorities are organized around the same three thematic areas as last year: (i) retail investors, including retirement investments; (ii) market-wide risks; and (iii) the SEC’s increasing analysis of data to identify problematic activity.… Continue Reading
The recently issued 2016 Regulatory and Examination Priorities Letter discloses FINRA’s new initiatives on market integrity and firm culture and reflects a focus on firms’ supervision regarding conflicts of interest and technology. Regulatory concern over many of these issues has been previously reported in this blog here, here, here and here.… Continue Reading
The FINRA Dispute Resolution Task Force issued its final report last week, making certain recommendations designed to improve the arbitration process. More notably, however, the Task Force reported that it was unable to reach agreement on a number of more controversial issues, reflecting deep divisions among practitioners in this area.… Continue Reading
Recognizing the substantial risks inherent in many derivatives transactions, and the substantial leverage that is often imbedded in derivatives, the SEC last week announced its proposed new rules that would impose limits on the exposure to derivatives for investment companies, which include mutual funds, exchange-traded funds and closed-end funds, and create other regulatory requirements. Exposure … Continue Reading
On November 24, 2015, the CFTC announced the new proposed Regulation Automated Trading (“Reg. AT”), which contains a variety of measures designed to prevent potential market disruptions arising from algorithmic trading. Among other things, Reg. AT proposes certain pre-trade risk and order management controls, the implementation of policies and procedures governing algorithmic trading, and additional … Continue Reading
The SEC announced this week its proposal to substantially overhaul the rules regarding alternative trading systems (“ATS”), often referred to as dark pools. The proposed rules would require firms operating ATSs to make additional disclosure about business activities that may present conflicts of interest between firms and ATS subscribers, and considerable information as to how … Continue Reading
On November 2, 2015, the Director of the SEC Division of Enforcement Andrew Ceresney spoke at the “SIFMA Compliance & Legal Society New York Regional Seminar” and outlined the SEC’s enforcement priorities with respect to market structure issues. This is yet another response by regulators to the growth of algorithmic trading and alternative trading venues, … Continue Reading
On October 21, 2015, CFTC Chair Timothy Massad spoke at the “Evolving Structure of the U.S. Treasury Market” conference organized by the U.S. Department of Treasury and the Federal Reserve Bank of New York. His remarks came the day after SEC Chair Mary Jo White’s comments, which we blogged about here, and follow this summer’s … Continue Reading
On October 20, 2015, SEC Chair Mary Jo White gave the keynote address at the “Evolving Structure of the U.S. Treasury Market” conference organized by the U.S. Department of Treasury and the Federal Reserve Bank of New York. The conference and speech follow this summer’s Joint Staff Report analyzing the significant volatility that the U.S. … Continue Reading
Potentially abusive trading algorithms, such as algorithms that purportedly engage in “spoofing” or “layering” are the subject of considerable regulatory interest. However, in an interesting complaint filed on October 19, 2015, the CFTC alleged that a firm manually entering futures orders engaged in illegal spoofing that appears to have lured algorithmic traders into the market. … Continue Reading
Mistakes in computer coding by a high frequency trading firm that went undetected for approximately four years were responsible for approximately 12.6 million orders that violated Reg NMS, according to an Order settling an enforcement proceeding with Latour Trading LLC, announced by the SEC on September 30. These noncompliant orders involved more than $4.6 billion … Continue Reading
Last week, SDNY Judge Jesse Furman issued a 51 page decision in In Re: Barclays Liquidity Cross and High Frequency Trading Litigation dismissing all of the cases consolidated under the MDL. In these cases, investor plaintiffs asserted federal securities law claims under Section 10(b) and 6(b) of the Exchange Act against seven stock exchanges, Barclays … Continue Reading
In the latest round of regulatory action involving high frequency trading and dark pools, the SEC announced yesterday that it reached a settlement with ITG, Inc., and its affiliate Alternet Securities, Inc., imposing a $20.3 million sanction based on ITG’s misuse of confidential order information to benefit the firm’s proprietary high-frequency trading.… Continue Reading
Ruling on Barclays’ motion to dismiss the action brought by the New York Attorney General regarding Barclays’ alternative trading system (“ATS”), Justice Shirley Kornreich suggested that the AG may face substantial hurdles in proving its case, although the Court narrowly upheld the Martin Act claim as a matter of law. The AG based its claim … Continue Reading
On January 12, 2015, the Securities and Exchange Commission announced that it had obtained a $14 million settlement against two exchanges formerly owned by Direct Edge Holdings, EDGA and EDGX (the “Respondent Exchanges”) for their failure to file Exchange Rules that accurately described the order types they offered, and for providing preferential disclosure to certain … Continue Reading
FINRA’s recently-released Regulatory and Examinations Priorities Letter for 2015 reflects substantial regulatory interest in high-frequency trading and other issues arising from trading technology. Regulatory concern over these issues has been previously reported on this blog here and here. The 2015 Letter states that FINRA has adapted its surveillance program to identify potentially violative conduct such … Continue Reading
Bringing quantitative analyses to the debate over high-frequency trading, two working papers recently made available by the SEC’s Division of Economic and Risk Analysis present economic models suggesting that there are market benefits from certain forms of high-frequency and low-latency trading. In light of the on-going interest in high-frequency trading among various regulators, the recognition of … Continue Reading
Regulators across markets continue to show interest in high frequency trading and algorithmic trading generally. Recent developments in this area include: On October, 16, 2014, the SEC imposed a $1 million sanction on a high frequency trading firm, Athena Capital Research, which allegedly placed large numbers of rapid-fire orders in the final two seconds of … Continue Reading
In the recent case Citigroup Global Markets Inc. v. Ghazi Abdullah Abbar, et al., 13 Civ. 2172 (2d Cir. Aug. 1, 2014), the Second Circuit held that, under FINRA rules, an investor who purchased an over-the-counter derivative from a financial institution was not a “customer” of the financial institution’s affiliated broker-dealer, notwithstanding the broker-dealer’s involvement … Continue Reading
SEC’s 2016 Examination Priorities Focus on Retail Investors, Market Wide Risk and Use of Data Analytics
By Harry Frischer, Brian Friedman and Tracey Silver on Posted in Financial Services, Securities Regulatory
FINRA’s 2016 Examination Priorities Identifies New Initiatives on Market Integrity and Firm Culture and Further Concern on Supervision and Controls
By Harry Frischer, Brian Friedman and James Unger on Posted in Financial Services
FINRA Arbitration Task Force Fails To Reach Consensus On Many Major Issues
By Harry Frischer, Brian Friedman and Massiel Pedreira on Posted in Financial Services, Securities Law, Securities Litigation, Securities Regulatory
SEC Proposal Would Limit Investment In Derivatives By Investment Companies
By Harry Frischer and Brian Friedman on Posted in Securities Regulatory
CFTC Proposes New Regulations For Algorithmic Trading
By Harry Frischer, Brian Friedman and Philip Arnold on Posted in Financial Services
SEC Proposes Rules To Enhance Transparency And Oversight Of Alternative Trading Systems
By Harry Frischer and Brian Friedman on Posted in SEC Enforcement, Securities Law, Securities Regulatory
SEC Director of the Division of Enforcement Discusses Market Structure Enforcement
By Harry Frischer and Brian Friedman on Posted in Financial Services
CFTC Chair Discusses the CFTC’s Response to Algorithmic Trading
By Harry Frischer and Brian Friedman on Posted in Financial Services
SEC Chair Calls for Reexamination of Treasury Market Regulations in Light of High Speed Electronic Trading
By Harry Frischer, Brian Friedman, Boris Zeldin and Stacey P. Eilbaum on Posted in Securities Law, Securities Regulatory
CFTC Accuses Firm Manually Entering Orders Of Spoofing Scheme That Fooled Algorithmic Traders
By Harry Frischer, Brian Friedman, Boris Zeldin and Stacey P. Eilbaum on Posted in Financial Services
Coding Errors Lead To SEC Sanctions for High-Frequency Trading Firm
By Harry Frischer and Brian Friedman on Posted in Financial Services, SEC Enforcement, Securities Law
Big Loss For Plaintiffs In High Frequency Trading Cases
By Harry Frischer, Brian Friedman and Boris Zeldin on Posted in Financial Services, Securities Regulatory
SEC Sanctions Dark Pool Operator and Affiliated High Frequency Trader
By Harry Frischer, Brian Friedman and Alyse F. Stach on Posted in SEC Enforcement, Securities Law, Securities Regulatory
New York AG May Face A Tough Road In High Frequency Trading Case Against Barclays
By Harry Frischer, Stephen Ratner, Brian Friedman and Celia Cohen on Posted in Financial Services, Securities Law, Securities Regulatory
SEC Sanctions Two Exchanges for Failing to Accurately Describe Order Types and Making Preferential Disclosure to High Frequency Traders
By Harry Frischer, Stephen Ratner, Brian Friedman and Boris Zeldin on Posted in Financial Services, Securities Regulatory
FINRA’s 2015 Examination Priorities Zero In On Abusive Trading Algorithms and Other Issues Involving Trading Technology
By Harry Frischer, Stephen Ratner, Brian Friedman and Michael R. Hackett on Posted in Financial Services, Securities Regulatory
SEC Working Papers Suggest Market Benefits From Certain Types of High-Frequency and Low-Latency Trading
By Harry Frischer, Stephen Ratner, Brian Friedman and Edward Canter on Posted in Financial Services, Securities Regulatory
Regulators Continue To Address High-Frequency Trading
By Harry Frischer, Brian Friedman, Stephen Ratner and Boris Zeldin on Posted in Financial Services, Securities Regulatory
Second Circuit Rules That Derivatives Counterparty Is Not A “Customer” of Broker-Dealer Under FINRA Rules
By Harry Frischer, Brian Friedman and Philip Arnold on Posted in Securities Regulatory
