May 26, 2020

May 26, 2020

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FINRA Proposed a Rule Change With Respect to the Establishment of a Second Trade Reporting Facility

The Financial Industry Regulatory Authority recently filed a proposed rule change with the Securities and Exchange Commission to adopt rules relating to the creation of a second Trade Reporting Facility (TRF) to be operated in conjunction with Nasdaq, Inc. (Nasdaq”. The second FINRA/Nasdaq TRF (FINRA/Nasdaq TRF Chicago) would provide FINRA members with another facility to which they may report over-the-counter (OTC) trades in National Market System (NMS) stocks. Currently, FINRA has three facilities that allow its members to report such trades.

The establishment of the proposed FINRA/Nasdaq TRF Chicago would provide FINRA members with another mechanism to facilitate compliance with member firms’ OTC equity trade reporting obligations outline in the Trade Reporting Notice published by FINRA on January 20, 2016. The Notice explained that a firm that routinely reports its OTC trades in NMS stocks to only one FINRA facility must maintain connectivity and report to a second FINRA facility if the firm intends to continue to support OTC trading as an executing broker, while its primary facility is experiencing a widespread systems issue. The proposed FINRA/Nasdaq TRF Chicago would provide members with an additional available facility for such reporting.

If the SEC approves the proposed rule change, the proposed rule change will be effective the date on which the FINRA/Nasdaq TRF Chicago commences operations. As stated in the proposed rule, it is anticipated that the FINRA/Nasdaq TRF Chicago will commence no earlier than August 1.

The text of the proposed rule change is available here.

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About this Author

Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange...

Gregory Uffner, Financial Services Attorney, Katten Law Firm

Gregory Uffner is an associate in the Financial Services practice. 

While in law school, Gregory was an associate editor for the Moot Court Board, a member of the Fordham Urban Law Journal and served as managing editor for the Fordham Sports Law Forum.