NEW YORK & WASHINGTON, DC – The nation’s primary self-regulatory organisations for the securities industry – NYSE Regulation and the Financial Industry Regulatory Authority (Finra) – have announced an agreement with 10 US exchanges to strengthen investor protection by consolidating the surveillance, investigation, and enforcement of insider trading in equity securities.
Under the agreement, each exchange gives responsibility for the detection of insider trading to NYSE Regulation for New York Stock Exchange- and NYSE Arca-listed securities. Finra is responsible for Amex- and Nasdaq-listed securities, no matter where trading occurs in the US.
The market centres participating in the agreement, which has been filed with the Securities and Exchange Commission (SEC), are the American Stock Exchange, Boston Stock Exchange, CBOE Stock Exchange, Chicago Stock Exchange, International Securities Exchange, Nasdaq Stock Market, National Stock Exchange, New York Stock Exchange, NYSE Arca, Philadelphia Stock Exchange and FINRA.
“This breakthrough agreement will allow NYSE Regulation and Finra to implement across markets their state-of-the-art insider trading surveillance and investigation programmes for all listed securities in the US," says Richard Ketchum, chief executive officer, NYSE Regulation and chairman of Finra. “A focused, consolidated review strengthens our ability to prevent anyone from profiting from insider information.”
Stephen Luparello, senior executive vice-president of FINRA, says: “While US equity markets have always co-ordinated very well with each other to detect and investigate insider trading, this agreement takes insider-trading surveillance to a new level because it consolidates within Finra and NYSE Regulation what used to be 11 discreet programmes at each market centre. As a result, potential insider traders, whether acting alone or in concert with others, and regardless of where they trade in the US, will be more readily identified in this new, more unified structure.”
Currently, each exchange conducts its own regulatory insider-trading programme and relies upon co-operation with other exchanges when potential insider trading is detected. Both NYSE Regulation and Finra operate highly sophisticated surveillance programmes to identify potential insider trading on a real-time basis. When suspect trading activity is identified, regulatory staff conducts an in-depth review using advanced analytical tools, news reports, and other sources of information.
The week on Risk.net,October 14-20, 2016Receive this by email