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ARTICLE · 20 JANUARY 2022

Firm Settles FINRA Charges For Intermarket Sweep Order Violations

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A broker-dealer settled FINRA charges for violations of intermarket sweep order regulations and supervisory rules.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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A broker-dealer settled FINRA charges for violations of intermarket sweep order ("ISO") regulations and supervisory rules.

In a Letter of Acceptance, Waiver and Consent, FINRA found that the firm allegedly violated Rule 242.611(c) ("Order Protection Rule: Intermarket Sweep Orders") of SEC Regulation NMS, which requires broker-dealers to take "reasonable steps" to ensure that routed ISO orders meet the definitions set by Rule 242.600(b)(30) ("Effective transaction reporting plan"). FINRA stated that orders that failed to meet these definitions were not routed against other exchanges' protected quotes. FINRA charged the firm with violating the "reasonable steps" requirement by failing to (i) inform its compliance department that it was routing ISOs, (ii) develop policies and procedures for complying with ISO regulations and (iii) maintain firm-specific quotation data or conduct periodic reviews to prevent trade-throughs. FINRA found this violative of FINRA Rule 2010 (

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