06 February, 2023
Working Group Update 2/6/2023
06 February, 2023
- Regulation Best Execution. James Dombach and Larry Bergmann of the Davis Wright Tremaine law firm presented to members of the Front Office Committee and the Compliance and Surveillance Working Group on the SEC’s recent Regulation Best Execution rule proposal.
- FIF Front Office Committee. The Front Office Committee reviewed applicable updates and notices from the SEC, FINRA, FINRA CAT and the equity and option exchanges. The spotlight presenters were Ari Burstein and Sharon Flanagan of IntelligentCross, who discussed the recent FINRA filing with the SEC to add IntelligentCross as a participant of FINRA’s Alternative Display Facility (ADF).
- SEC Order Competition Rule Proposal. Members of the Data and Technology Committee, the Front Office Committee and the Compliance and Surveillance Working Group continued their discussion of the SEC’s Order Competition Rule proposal, including applicability to orders received and routed by a foreign broker-dealer, applicability to clearing firms, approval and implementation processes for auction facilities, auction processes, the exemption for fractional share orders, and applicability to block orders from a registered investment advisor.
- FIF Rule 605 Working Group. The Rule 605 Working Group continued its discussion of the SEC’s recent rule proposal on Disclosure of Order Execution Information, including share-weighted average period from time of order receipt to time of order execution, reporting for marketable orders that are larger than the opposite-side national best bid or offer, reporting for trading halts, and reporting of E/Q statistics.
- FIF Rule 606 Working Group. The Working Group reviewed a draft supplemental comment letter on the FINRA rule filing with the SEC to require disclosure of order routing information for OTC equities. FIF submitted this comment letter to the SEC. The Working Group discussed a question from an FIF member on determining the marketability of a limit order for Rule 606(a) reporting in a look-through scenario.
- FIF CAT Monthly Update Working Group Call. The FIF CAT Monthly Update Working Group reviewed guidance and updates from the CAT Plan Participants and FINRA CAT on CAT Transaction Reporting and CAT CAIS reporting during the prior month. The Working Group reviewed the current areas of focus for FIF members and the current open issues for CAT Transaction Reporting and CAT CAIS reporting.
- FIF CAT Transaction Reporting Working Group. The Working Group discussed the current exemption from CAT reporting for verbal activity, which is scheduled to expire on July 31, 2023. The Working Group discussed current industry efforts to obtain an extension of this exemption. The Working Group discussed possible approaches for firms in the event that the regulators do not grant an extension of the exemption.
- FIF CAT CAIS Working Group. The Working Group reviewed recent FAQ updates to FAQs Q16 (submitting the same CAIS record every business day) and Q19 (full account refreshes). The Working Group discussed the CAIS account refresh process. The Working Group discussed CAIS feedback and FINRA inquiries relating to LTID Phase submissions. The Working Group discussed the recent announcement by FINRA CAT that the dates for “Interim Reporting Obligation 4 and Full CAIS Compliance Go-Live, currently March 10 and March 17 respectively, will be moved to future dates to be announced shortly.” The Working Group discussed new FAQ Q71 on reporting for an FDID that has a natural person customer and two trust customers with the same SSN.
Eduard Kotlyar