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ARTICLE · 10 AUGUST 2021

Firm Settles FINRA Charges For Systems Compliance And Integrity Violations

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An inter-dealer broker settled FINRA charges for non-compliance with SEC Regulation SCI ("Systems Compliance and Integrity") after the broker failed to determine that its alternative trading system was subject to the regulation.

United StatesFinance and Banking
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An inter-dealer broker settled FINRA charges for non-compliance with SEC Regulation SCI ("Systems Compliance and Integrity") after the broker failed to determine that its alternative trading system ("ATS") was subject to the regulation.

FINRA found that the firm, in its calculations to determine whether its ATS qualified as an SCI entity, incorrectly applied the average daily share volume in national market system stocks instead of the average daily dollar volume. In a Letter of Acceptance, Waiver, and Consent, FINRA stated that this misinterpretation of the threshold test led the firm to believe it was not required to adopt Regulation SCI policies. As a consequence, the FINRA found that the firm violated Regulation SCI Rule 1001 ("Obligations related to policies and procedures of SCI entities").

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