FINRA to Conduct Targeted Examinations Regarding Order Routing and Execution Quality of Customer Orders in Exchange-Listed Stocks

The Financial Industry Regulatory Authority, Inc.’s Market Regulation Department has issued a targeted examination letter dated July 2014 to certain FINRA member firms notifying each firm that FINRA’s Trading Examinations Unit (TEU) is conducting a review of the firm’s processes and procedures in connection with order routing and execution quality of customer orders in exchange-listed stocks. As part of the review, TEU is requesting certain information from January 1, 2014 to the present, including, among other things, the firm’s (i) written supervisory procedures related to FINRA Rule 5310 (regarding best execution and interpositioning), (ii) customer order execution procedures and reviews, including an explanation of how the firm’s exchange order-routing decisions are made for customer non-marketable limit orders and customer market and marketable limit orders, (iii) use of other broker-dealers for execution of customer orders and (iv) policies regarding passing exchange marker/taker fees on to its customers.   

Click here to read the July 2014 Targeted Examination Letter.

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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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