FINRA Proposes to Amend Rule 11892

On May 6, the Securities and Exchange Commission published a notice of filing of a proposed change to Financial Industry Regulatory Authority, Inc. Rule 11892 regarding clearly erroneous transactions in exchange-listed securities. The amendments grant FINRA the authority to declare null and void (i) transactions based on “fundamentally incorrect or grossly misinterpreted issuance information” and (ii) transactions that occur after a disruption or malfunction of the electronic communication or trading facilities or during a regulatory halt (i.e., a trading halt). The amendments allow FINRA to view a multiday series of trades as a single event if such transactions were based on fundamentally incorrect or grossly misinterpreted issuance information. FINRA’s authority to declare such transactions null and void excludes transactions that have reached the settlement date or that are part of an initial public offering. The amendments also provide that each member firm involved in a transaction declared null and void or subject to a trading halt will be notified as soon as practicable. 

The proposed rule change is available here.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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