FINRA Modifies "Trade Match" and "Trade Acceptance" Clearing Submission Requirements

FINRA announced that "firms that elect to submit clearing-eligible trades to the Alternative Display Facility ("ADF") using 'Trade Match' or 'Trade Acceptance' functionality are required to identify only a contra party that is another ADF participant with access to the ADF and the ability to view and take action with respect to the submission."

In addition, FINRA notified member firms that the automatic lock-in functionality on the ADF will be disabled as of October 24, 2016. This functionality is being disabled because the system does not prevent the entry of a trade against a contra party that is not an ADF participant and could result in the automatic lock-in of trades against a non-ADF participant that does not have access to the ADF. FINRA stated that once the automatic lock-in functionality is disabled, if an alleged contra party takes no action on a clearing-eligible trade submitted to the ADF for "Trade Acceptance," then the trade will be carried over and remain open; it will not be automatically locked-in and sent to the National Securities Clearing Corporation for clearance and settlement. FINRA noted that it will make a subsequent announcement if it eventually elects to enable the automatic lock-in functionality.