FINRA boosts OTC transparency by 20% of all NMS Equities

Rick Steves

As the Financial Industry Regulatory Authority (FINRA) strives for investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services, transparency in capital markets is a priority. The US regulator announced today of increased transparency in over-the-counter (OTC) trading in equity markets, with expanded trading-volume data available to the public […]

FINRA boosts OTC transparency by 20% of all NMS Equities

As the Financial Industry Regulatory Authority (FINRA) strives for investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services, transparency in capital markets is a priority.

The US regulator announced today of increased transparency in over-the-counter (OTC) trading in equity markets, with expanded trading-volume data available to the public including all equity volume executed OTC by FINRA members (non-ATS OTC volume) adding to data from alternative trading systems (ATSs) including “dark pools” already available. The additional data covers approximately 20 percent of all trading volume in National Market System (NMS) equities.

Non-ATS OTC and ATS volumes will be published with a two-week delay for stocks in Tier 1 of the NMS Plan to Address Extraordinary Market Volatility (i.e., those NMS stocks in the S&P 500 Index or the Russell 1000 Index and certain ETPs) and a four-week delay for all other NMS stocks and OTC equity securities. Monthly aggregate non-ATS volume will be published on a one-month delayed basis. Also, FINRA will aggregate and publish volumes of firms that execute fewer than 200 non-ATS transactions per day on average during the reporting period (weekly or monthly) on a non-attributed basis.

FINRA Chairman and CEO Richard Ketchum said: “Enhanced disclosure of over-the-counter trading serves the interests of investors and other market participants by enabling them to better understand a firm’s trading volume and market share. Taken together with FINRA’s current reporting on alternative trading systems, the new data completes a holistic picture of trading that investors can use to make better-informed trading decisions”.

In June 2014, FINRA started providing aggregate weekly volume information and number of trades, by security, for each ATS, in an attempt to increase transparency in off-exchange trading. Last year, ATS data became available for all since July 2015.

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