Consistent with the increased regulatory scrutiny of proprietary trading firms-and high frequency trading firms in particular—the Securities and Exchange Commission (SEC) recently proposed amendments to SEC Rule 15b9-1 (also referred to herein as the "Rule") under the Securities Exchange Act of 1934 ("Exchange Act") that would, if adopted in their current form, require virtually all proprietary trading firms that currently are registered as broker-dealers with the SEC to become members of the Financial Industry Regulatory Authority (FINRA). In particular, any registered broker-dealer that engages in "off-exchange" trading would be required to join FINRA unless one of the very narrow exemptions in the proposed amended version of the Rule applied. As set forth in greater detail below, FINRA membership would impose upon such firms a variety of new obligations and associated costs. Off-exchange trading refers to any securities transaction in an exchange-listed security:

- that is not effected, directly or indirectly, on a national securities exchange, including trading that occurs on alternative trading systems and directly with a broker-dealer, acting either as agent or principal; or

- that is effected by, or on behalf of, a registered broker-dealer on a national securities exchange of which such broker-dealer is not a member.