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FINRA issues first cross-market report cards

Joe Mont | April 29, 2016

The Financial Industry Regulatory Authority has launched new, monthly “cross-market equities supervision report cards,” aimed at helping firms identify and halt potential manipulation, including spoofing and layering activity.

Layering refers to entering limit orders with the intended effect of moving the market to obtain a beneficial execution on the other side of the market. Spoofing refers to entering orders to entice other participants to join on the same side of the market at a price at which they would not ordinarily trade, and then trading against the other market participants' orders.

The new report cards are sent to firms where FINRA identifies potential spoofing or layering by the firm or entities to which the firm is providing market access. The reports provide a summary of the identified market activity, detailed information about the exceptions, and trends in such trading over the preceding six months. The report cards...

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