SEC Proposes Changes to Regulation ATS for Communication Protocol Systems Publications

Broker-dealer crossing networks are alternative trading systems that match buy and sell orders from registered broker-dealers. These systems are used to trade securities that are not listed on a formal exchange. Broker-dealers are required to disclose their order information to the crossing network, which then matches the orders and executes the trade. (A) If an SCI event is resolved and the SCI entity’s investigation of the SCI event is closed within 30 calendar days of the occurrence of the SCI event, then within five business days after the resolution of the SCI event and closure of the investigation regarding the SCI event, submit a final written notification pertaining to such SCI event to the Commission containing the information required in paragraph (b)(4)(ii) of this section. (a) A registered security-based swap data repository may establish normal closing hours during periods when, in its estimation, the U.S. market and major foreign markets are inactive.

Upon receipt of such request, the Commission shall promptly order the vacation to be effective upon the date named in the request and send a copy of the request and its order to all other security-based swap execution facilities, SBS exchanges, and registered clearing agencies that clear security-based swaps. Vacation of registration shall not affect any action taken or to be taken by the Commission based upon actions, activities, or events occurring during the time that the security-based swap execution facility was registered by the Commission. From and after the date upon which the vacation became effective the said security-based swap execution facility can thereafter be registered again by applying to the Commission in the manner provided in paragraph (b) of this section for an original application.

The SEC stated that Communication Protocol Systems do not fall within the definition of “exchange,” and as a result, market participants using these systems cannot avail themselves of the same investor protections, fair and orderly market principles, and SEC oversight that apply to today’s registered exchanges or ATSs. In light of this, the revisions to Rule 3b-16 discussed below are meant to bring these systems within the meaning of an exchange. As explained by the SEC, it adopted Rule 3b-16 to more accurately describe the range of markets that performed exchange functions as those were understood at that time. The SEC stated that most ATSs operating at the time of Rule 3b-16’s adoption met the criteria discussed above in that they offered the use of orders and algorithms that matched orders and allowed broker-dealers to place and execute orders on the systems, and the systems functioned as limit order books where orders were executed according to time, price, and size priority.

The required margin for each long or short position in a security future shall be fifteen (15) percent of the current market value of such security future. (B) If the instrument underlying such security future is a narrow-based security index, as defined in section 3(a)(55)(B) of the Act (15 U.S.C. 78c(a)(55)(B)), the product of the daily settlement price of such security future as shown by any regularly published reporting or quotation service, and the applicable contract multiplier. (i) The Commission will, by order, if it finds, after notice and opportunity for hearing, that such action is necessary or appropriate in the public interest, and is consistent with the protection of investors, suspend for a period not exceeding twelve months, limit, or revoke the exemption for an NMS Stock ATS pursuant to § 240.3a1-1(a)(2) of this chapter. (2) The expiration of the review period, or, if applicable, the end of the extended review period, pursuant to paragraph (a)(1)(iv)(B) of this section. (2) The expiration of the review period, or, if applicable, the end of the extended review period, pursuant to paragraph (a)(1)(ii) of this section. (ii) The alternative trading system shall file an amendment on Form ATS at least 20 calendar days prior to implementing a material change to the operation of the alternative trading system.

• Member means a member of a security-based swap execution facility that is not a U.S. person.
• (5) Whenever a security-based swap execution facility finds by final decision that a person has committed a disciplinary offense and such finding makes such person ineligible to serve on that security-based swap execution facility’s disciplinary committees, arbitration panels, oversight panels, or governing board, the security-based swap execution facility shall inform the Commission of that finding and the length of the ineligibility in a form and manner specified by the Commission.
• These include challenges grounded in administrative law, as well as ones potentially invoking the associational and expressional freedoms of the First Amendment.
• Broker-dealer crossing networks are alternative trading systems that match buy and sell orders from registered broker-dealers.

(j) Notification of final disciplinary action involving financial harm to a customer. (B) Disclose for any purpose inconsistent with the performance of such person’s official duties as an employee, governing board member, committee member, or consultant any material, non-public information obtained through special access related to the performance of such duties. (iv) The respondent may withdraw its offer of settlement at any time before final acceptance by a disciplinary panel. If an offer is withdrawn after submission, or is rejected by a disciplinary panel, the respondent shall not be deemed to have made any admissions by reason of the offer of settlement and shall not be otherwise prejudiced by having submitted the offer of settlement.

(k) NMS Stock ATS means an alternative trading system, as defined in paragraph (a) of this section, that trades NMS stocks, as defined in paragraph (g) of this section. (d) Debt security shall mean any security other than an equity security, as defined in § 240.3a11-1 of this chapter, as well as non-participatory preferred stock. (C) Dividing the aggregate sum by the total number of reported shares for that day in the security. (a) The term short sale shall mean any sale of a security which the seller does not own or any sale which is consummated by the delivery of a security borrowed by, or for the account of, the seller. (iii) No stabilizing is made at a price above the offering price in the United States, except as permitted by paragraph (f)(5) of this section. Stabilizing is prohibited except for the purpose of preventing or retarding a decline in the market price of a security.

Systems disruption means an event in an SCI entity’s SCI systems that disrupts, or significantly degrades, the normal operation of an SCI system. Responsible SCI personnel means, for a particular SCI system or indirect SCI system impacted by an SCI event, such senior manager(s) of the SCI entity having responsibility for such system, and their designee(s). Indirect SCI systems means any systems of, or operated by or on behalf of, an SCI entity that, if breached, would be reasonably likely to pose a security threat to SCI systems. (iv) Before issuing a substituted compliance order pursuant to this section, the Commission shall have entered into memoranda of understanding and/or other arrangements with the relevant foreign financial regulatory authority or authorities under such foreign financial regulatory system addressing supervisory and enforcement cooperation and other matters arising under the substituted compliance determination. Person that, in connection with such person’s security-based swap dealing activity, arranged, negotiated, or executed the security-based swap using its personnel located in a U.S. branch or office, or using personnel of an agent located in a U.S. branch or office. (qq) Unique Identification Code or UIC means a unique identification code assigned to a person, unit of a person, product, or transaction.

The Commission may, by order, as provided in paragraph (a)(1)(v)(B) of this section, declare an initial Form CC filed by a competing consolidator ineffective no later than 90 calendar days from the date of filing with the Commission. (3) The national market system plan submitted pursuant to this section shall include a provision requiring the creation and maintenance by the plan processor of a method of access to the consolidated data stored in the central repository that includes the ability to run searches and generate reports. (89) SRO trading facility means a facility operated by or on behalf of a national securities exchange or a national securities association that executes orders in a security or presents orders to members for execution. (88) SRO display-only facility means a facility operated by or on behalf of a national securities exchange or national securities association that displays quotations in a security, but does not execute orders against such quotations or present orders to members for execution. An exchange registered under section 6(g) of the Act (15 U.S.C. 78f(g)), or a national securities association registered under section 15A(k) of the Act (15 U.S.C. 78o-3(k)), may raise or lower the required margin level for a security future to a level not lower than that specified in this section, in accordance with section 19(b)(7) of the Act (15 U.S.C. 78s(b)(7)). (2) A security futures intermediary that carries a security future on behalf of a customer in a futures account shall record and conduct all financial relations with respect to such security future and related positions in accordance with the margin rules of the self-regulatory authorities of which the security futures intermediary is a member.

(ii) Impose the requirements of paragraph (b)(1)(i) of this section for the remainder of the day and the following day when a national best bid for the covered security is calculated and disseminated on a current and continuing basis pursuant to an effective national market system plan. Finally, despite the complexity of the proposal—the version on the SEC’s website is more than 650 pages long and contains more than 220 separate requests for comment on a variety of issues—the Commission has provided a short 30-day period for public comment on the proposed amendments. This could be particularly Atlas Dex Price At Present burdensome for those market participants who also are interested in other significant SEC rule proposals that have already been published or have been announced in the agency’s regulatory agenda and are likely to be proposed in the near future. While the short comment period led to a public spat between Commissioner Peirce and Chair Gensler at the open meeting at which the rulemaking was considered, Chair Gensler noted that the 30-day period would start upon publication in the Federal Register, which he said currently has a publication backlog ranging between six to eight weeks.

To the extent an ATS publishes, circulates or causes to be circulated quotations for any security, Supplementary Material .01 similarly prohibits such publication or circulation without reasonable cause to believe that the quotations are bona fide. The most common way that trades are executed on crypto exchanges is through an order book. An order book is a list of all the buy and sell orders that have been placed on the exchange.

A stabilizing bid may be increased to a price no higher than the highest current independent bid for the security in the principal market if the principal market is open, or, if the principal market is closed, to a price no higher than the highest independent bid in the principal market at the previous close thereof. A stabilizing bid may be reduced, or carried over into another market at a reduced price, irrespective of changes in the independent bids or transaction prices for the security. If stabilizing is discontinued, it shall not be resumed at a price higher than the price at which stabilizing then could be initiated. (iii) Initiating stabilizing when there is no market for the security or before the offering price is determined. If no bona fide market for the security being distributed exists at the time stabilizing is initiated, no stabilizing shall be initiated at a price in excess of the offering price.

(ii) The rules of a security-based swap execution facility may provide that, in its discretion, a disciplinary panel may permit the respondent to accept a sanction without either admitting or denying the rule violations upon which the sanction is based. Where a respondent has requested a hearing on a charge that is denied, or on a sanction set by the disciplinary panel, the respondent shall be given an opportunity for a hearing in accordance with the rules of the security-based swap execution facility. A security-based swap execution facility shall maintain an automated trade surveillance system capable of detecting potential trade practice violations. The automated trade surveillance system shall load and process daily orders and trades no later than 24 hours after the completion of the trading day.

(3) The Commission has received the submission not later than the open of business on the business day that is 10 business days prior to the security-based swap execution facility’s implementation of the rule or rule amendment. Any time during its review under this section, the Commission may notify the security-based swap execution facility that it will not, or is unable to, approve the new rule or rule amendment. This notification will briefly specify the nature of the issues raised and the specific provision of the Act or the Commission’s rules thereunder, including the form or content requirements of this section, with which the new rule or rule amendment is inconsistent or appears to be inconsistent with the Act or the Commission’s rules thereunder. Member, with respect to a national securities exchange, has the same meaning as in section 3(a)(3) of the Act.

As a result, dark pools, along with high-frequency trading (HFT), are oft-criticized by those in the finance industry; some traders believe that these elements convey an unfair advantage to certain players in the stock market. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.