By Certain Agency, Only Firms On Block Orders.

[ by Howard Haykin ]

NYSE Regulation issued an advisory to certain Floor broker member organizations that meet 2 conditions, may eliminate the necessity of providing certain documents and information to FINRA by submitting an attestation to FINRA as described below.

• Condition 1:  Firm conduct san agency-only business;  and,

• Condition 2:  Firm does not represent orders for their own account, nor for accounts of an affiliated broker-dealer, nor for accounts over which they have investment discretion.

Applicable to What Transactions:   Under Rule 72(d) ... a Firm holding : 

• An order to buy and an order to sell an equivalent amount of the same security;
• Where both orders are for 10,000 shares or more, or where both orders are for a quantity of stock with a market value of $200,000 or more.
• In such cases, firm may "cross" those orders at a price at or within the Exchange best bid or offer ("BBO").
• Firm does not have to break up the cross transaction to trade with any bids or offers previously displayed at the Exchange BBO, including any interest with priority (a "Rule 72(d) crossing transaction").

A Floor broker, however, may not effect a Rule 72(d) crossing transaction for the account of the Floor broker or his or her member organization, an account of an associated person, or an account with respect to which the member, member organization or associated person thereof exercises investment discretion (other than legitimate error transactions effected in the firm's Floor error account).

Streamlining FINRA's review of Rule 72(d) crossing transactions.   Eligible member organizations on the trading Floor can submit an affirmation signed by an officer or other responsible person at the member organization to FINRA setting forth that the firm does not effect transactions, including crossing transactions pursuant to Rule 72(d), for its own account, an account of an associated person, or an account with respect to which the member, member organization or associated person thereof exercises investment discretion.

• Having an attestation on file with FINRA may reduce or eliminate the necessity to provide certain documents or information to FINRA related to potential affiliation with accounts participating in Rule 72(d) transactions.
• However, member organizations may still be required to submit documents and/or information relating to other aspects of Rule 72(d), such as the size requirement.

To Submit Affirmation to FINRA, Contact:  Thomas Bruno, Chief Counsel, FINRA Mkt Reg:  917.281.3081;  Thomas.Bruno@finra.org.

Direct questions to NYSE Regulation Staff Contacts:  Clare Saperstein, VP: 212.656.2355; or David De Gregorio, Chief Counsel:  212.656.4166.

For further details, go to:  [ NYSE Member Education Bulletin 13-7, 4/17/13 ].

Contact the writer at:  Howard@Compliance-Insights.com.