New FINRA Rule Aimed At Limiting Self-Trading

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New FINRA Rule Aimed At Limiting Self-Trading

FINRA announced recently that the SEC has approved a rule change designed to limit self-trading. FINRA Rule 5210 will require firms to have policies and procedures implemented that are reasonably designed to review their trading activity for, and prevent, a pattern or practice of self-trades resulting from orders originating from a single, or related, algorithm or trading desk. FINRA will announce the effective date of this rule soon. The rule should significantly increase FINRA’s ability to deter self-trading that serves to disrupt the marketplace, despite not involving fraudulent or manipulative intent.

Self-trades consist of transactions in a security resulting from the unintentional interaction of orders beginning at the same firm that do not involve a change in the beneficial ownership of the security. Self-trades that are made by single or related algorithms or trading desks increase concerns because this kind of trading may not reflect accurate trading interest, especially if there is a pattern or practice of these kinds of trades.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

By |May 16th, 2014|FINRA News|

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