FINRA Members Must Designate Intermarket Sweep Orders as Exceptions to Comply with Tick Size Pilot "Trade-At" Requirements

The tick size pilot program (the "Pilot"), which becomes effective October 3, 2016, requires firms to use the existing Intermarket Sweep Order ("ISO") trade reporting modifier when reporting trades to a FINRA facility that qualifies for the ISO exception to the Trade-at prohibition.

The Pilot consists of three test groups with 400 securities in each and a separate control group. Among other restrictions, securities in the third test group ("Test Group Three") will be subject to a Trade-at prohibition, whereby trading centers will not be permitted to execute an order for a security in Test Group Three at a price equal to a protected bid or protected offer unless an exception applies. One such exception exists for Intermarket Sweep Orders.