Breaking News
Investing Pro 0
New! 💥 Get ProPicks to see the strategy that has beaten the S&P 500 by 829%+ Claim 60% Off

FINRA moves to speed up market manipulation crackdowns

Published Nov 23, 2016 11:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. A sign for the Financial Industry Regulatory Authority (FINRA) is seen outside the offices in New York's financial district

By John McCrank

NEW YORK (Reuters) - Wall Street's industry-funded watchdog took steps to crack down more quickly on manipulative trading practices in the securities markets but needs more authority, according to a regulatory filing.

The Financial Industry Regulatory Authority (FINRA) is concerned that it has no quick means to stop disruptive trading activity after it has been identified without resorting to proceedings that can take years to complete, according to a filing on Monday with the U.S. Securities and Exchange Commission.

"FINRA believes that there are certain clear cases of disruptive and manipulative behavior, or cases where the potential harm to investors is so large, that FINRA should have the authority to initiate an expedited proceeding to stop the behavior from continuing," it said.

FINRA has proposed rules that take aim at practices known as "spoofing" and "layering," in which one or more traders move the price of a security by placing bogus orders and then modifying or canceling them so that they never become actual trades. Once there is an appearance of interest in the security, the trader can then buy or sell on the other side at better prices.

Earlier this month, a London-based day trader pled guilty to U.S. federal charges of contributing to the May 2010 "flash crash" by spoofing futures on CME Group's Chicago Mercantile Exchange.

FINRA would be better able to protect investors and market integrity if it had the ability to issue cease-and-desist orders more quickly to stop obvious disruptive and manipulative trading, the regulator said.

There also have been numerous cases in which manipulative trading originating from overseas, where FINRA has no direct jurisdiction, has been allowed to continue throughout lengthy investigation and enforcement procedures, FINRA said.

Under current rules, FINRA can initiate temporary cease-and-desist orders to alleged manipulators but they only remain in effect until the underlying disciplinary proceedings have concluded.

The proposed rules, which would require approval from the SEC, would allow FINRA to issue permanent cease-and-desist orders regardless of whether underlying disciplinary proceedings were taking place.

Only FINRA's chief executive officer or a senior officer designated by the CEO, could initiate permanent cease-and-desist order proceedings, and only after other attempts to resolve the conduct had been attempted, FINRA said.

The proposed changes are similar to rules adopted in February by exchange operator Bats Global Markets.

FINRA polices all registered U.S. broker dealers and stock and options exchanges. It conducts cross-market surveillance and has surveillance agreements with 18 exchanges.

FINRA moves to speed up market manipulation crackdowns

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email