SEC Approves FINRA Rule Concerning Self-Trades (FINRA Reg. Notice 14-28)

FINRA issued a regulatory notice regarding the SEC approval of new supplementary material to FINRA Rule 5210 ("Publication of Transactions and Quotations"). The new supplementary material addresses transactions in a security, resulting from the unintentional interaction of orders originating from the same firm, that involve no change to the beneficial ownership of the security.

Effective August 25, 2014, firms must have policies and procedures in place that are "reasonably designed" to prevent, and to review trading activity for, a pattern or practice of self-trades resulting from orders originating from a single algorithm or trading desk, or related algorithms or trading desks.

The notice goes on to describe the rule, including firms' obligations regarding self-trades and under what circumstances algorithms or trading strategies are presumed to be "related" for purposes of the rule.

See: FINRA Reg. Notice 14-28. Related news: SEC Approval of FINRA-Proposed Rule Change to Amend Self-Trading Rules (Fed. Reg.) (May 7, 2014); SEC Approves FINRA-Proposed Rule Regarding Self-Trades (with Lofchie Comment) (May 2, 2014); SEC Extends Review Period for FINRA Wash Sale Transactions Amendments (with Lofchie Comment) (March 3, 2014) FINRA Files Amendment to Proposed Rule Change Relating to Wash Sale Transaction, Self-Trades and FINRA Rule 5210 (December 4, 2013) FINRA Proposed Rule on Wash Sale Transactions (with Lofchie Comment) (August 16, 2013) MFA Comment Letter on Unintentional Wash Sales (September 26, 2013).