
By Buddy Doyle
Subscribe to our original industry insightsJust a few weeks ago, FINRA sent targeted examination letters to a select group of firms requesting information as part of a review of how firms handle the conflicts of interest related to payments or other inducements for order routing.
These letters are coming from the Trading & Financial Compliance Examinations (TFCE) section in Market Reg, and their focus examines three main aspects of the issue:
The SEC and FINRA each noted trading practices as a primary issue in their respective 2017 examination priorities, and both regulators reminded firms to provide accurate payment for order flow disclosures and accurate disclosures on how they comply with their duty of best execution when routing customer orders for execution. FINRA also reminded broker-dealers to consider how the automation of the markets and recent advances in trading technology and communications affect their order-handling decisions and their review of the execution quality they provide customers.
Further, in the last few months during exams, we’ve seen that regulators are expecting RIAs to be able to produce more detailed trade data to support best execution analysis than in the recent past.
More information on the sweep here
Oyster’s Trading & Market’s Practice team has worked for both large and small broker-dealers and registered investment advisors to examine their trading, order handling, and best execution processes. We have specifically worked on the conflicts that arise when accepting order flow inducements.
We can review your best execution practices and insure they will pass inspection with both customers and regulators. Our review involves both traders and compliance professionals to achieve meaningful outcomes for your firm.
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