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July 22, 2014

FINRA (Financial Industry Regulatory Authority) Amends Rules to Address Extraordinary Market Volatility

The Financial Industry Regulatory Authority adopted rule amendments in furtherance of the joint industry Regulation NMS Plan to Address Extraordinary Market Volatility (Plan). Pursuant to the Plan, FINRA amended its rules to, among other things, require members that are trading centers in national market system (NMS) stocks to have written policies and procedures preventing the execution and display of offers outside the Plan's price band for each tier of NMS stocks. Trading centers must also have written policies and procedures to prevent the execution of trades in NMS stocks during a trading pause. The rule amendments are effective April 8, 2013.

FINRA also expanded the scope of Rule 11892 to apply to all over-the-counter transactions, including transactions subject to the Plan. Transactions that occur within the Plan’s price bands could still be deemed clearly erroneous under Rule 11892. Certain transactions occurring outside the Plan’s price bands will also be deemed clearly erroneous.The rule amendments became effective on January 30.

More information is available here.

©2014 Katten Muchin Rosenman LLP

About the Author

Janet M. Angstadt, Securities Attorney, Katten Muchin Law Firm
Partner

Janet Angstadt concentrates her practice in financial services. She counsels broker-dealers and market centers on a wide variety of legal and regulatory matters, including mergers and acquisitions involving broker-dealers; exchange, FINRA and SEC investigations; compliance issues related to registrations, sales practice, short sales, Regulation NMS, market making, and options and equities order handling; broker-dealer sponsored alternative trading systems such as dark pools and electronic communication networks; policies and procedures for trading systems development and testing; and...

312.902.5494

About the Author

James M. Brady, Katten Muchin Law Firm, Finance Attorney
Associate

James Brady concentrates his practice in financial services matters.

312-902-5362

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