FINRA reminded member firms of new FINRA Rule 4554, which requires alternative trading systems ("ATSs") to submit additional ATS-specific data elements in existing reports for orders in National Market System stocks (i.e., listed stocks). According to FINRA, the purpose of Rule 4554 is to enhance FINRA's ability to more fully reconstruct an ATS's order book and better perform order-based surveillance, including details that will help identify layering, quote spoofing and mid-point pricing manipulation.
FINRA explained that Rule 4554 requirements apply to order and execution information for National Market System stocks in the following four categories of additional reporting requirements:
- data to be reported by all ATSs at the time of order receipt;
- data to be reported by all ATSs at the time of order execution;
- data to be reported by ATSs that display subscriber orders; and
- data specific to ATSs that are registered as alternative display facility trading centers (commonly referred to as ADF Trading Centers).
FINRA Rule 4554 will become effective on November 7, 2016. In order for FINRA to be able to map an order identifier to a specific order type upon the effective date of the rule, all ATSs must provide a list of their current order types no later than October 19, 2016.
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