More On Legal & Compliancefrom The Advisor's Professional Library
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
The Financial Industry Regulatory Authority announced Wednesday that Direct Edge, the third largest stock exchange operator in the U.S., has agreed with FINRA to provide market surveillance services on behalf of Direct Edge's two licensed stock exchanges.
Under the agreement, FINRA says that it will have “surveillance oversight of more than 90% of U.S. equities trading volume.” With a “nearly complete view of market activity,” FINRA says it will be able to “expand its role as an investor guardian by identifying abusive activity across multiple markets.”
Richard Ketchum (right), FINRA’s CEO, said in a statement, “Our comprehensive cross-market surveillance patterns will soon cover over 90% of the listed equities market and allow FINRA to better pursue potential cross-market abuses and more quickly identify new threats to the fairness and integrity of our markets.”
Allowing for necessary technical and operational configuration changes, Direct Edge said in the statement that it expected the new arrangement to become effective in the fourth quarter. Currently, FINRA performs examination and disciplinary services on behalf of Direct Edge. With this agreement, all of Direct Edge's third-party regulatory services will be consolidated with FINRA.
“The stock market ecosystem is tightly interconnected, and its surveillance is well-served by FINRA’s holistic view of the market," said William O'Brien, Direct Edge’s CEO. “Detecting trading patterns spanning multiple exchanges and other market centers will enhance market integrity and, in turn, boost investor confidence that improper conduct and bad actors can be detected and punished.”