About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

FINRA Bans Spoofing and Layering Practices In Its Markets

Subscribe to our newsletter

The Financial Industry Regulatory Authority (FINRA), the US self-regulatory organization serving the NYSE, Nasdaq and other US-based exchanges, has submitted a proposal to the US Securities and Exchange Commission to sanction trading practices commonly known as “spoofing” and “layering.”

FINRA has proposed adding provisions to Rule 5210 of the US Securities Exchange Act of 1934 allowing the authority to issue cease and desist orders in response to parties who enter multiple limit orders that change supply and demand for a security, and are executed, but then canceled (spoofing), and to parties who narrow spreads of securities by placing orders inside the national best bid and offer (NBBO), then placing orders on the opposite side of the market that execute against market participants who interacted with the first orders inside the NBBO (layering).

In FINRA’s submission to the SEC, the authority stated that it plans to begin implementing its proposal for markets it oversees and for markets it regulates under service agreements, within 30 days of FINRA’s November 15 filing of the proposal with the SEC.

Cease and desist orders may be temporary or permanent, and hearings on specific cases can be held, according to FINRA’s proposal. Those who violate such orders, however, may have their FINRA association or membership canceled, or face disciplinary sanctions, the proposal said.

FINRA’s proposal is similar to provisions already put in place by Nasdaq and the BATS Exchange for their markets.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Enhancing trader efficiency with interoperability – Innovative solutions for automated and streamlined trader desktop and workflows

Traders today are expected to navigate increasingly complex markets using workflows that often lag behind the pace of change. Disconnected systems, manual processes, and fragmented user experiences create hidden inefficiencies that directly impact performance and risk management. Firms that can streamline and modernise the trader desktop are gaining a tangible edge – both in speed...

BLOG

Implementing Events-based Trading and Prediction Markets

By Jon Light, Senior Director of Product Management at Devexperts. The current surging interest in prediction markets is leading to a general reevaluation of this type of trading, with many financial services firms now questioning whether to offer events-based trading to their own users. To date, several high-profile firms have moved to incorporate prediction markets...

EVENT

Eagle Alpha Alternative Data Conference, London, hosted by A-Team Group

Now in its 8th year, the Eagle Alpha Alternative Data Conference managed by A-Team Group, is the premier content forum and networking event for investment firms and hedge funds.

GUIDE

Complex Event Processing

Over the past couple of years, Complex Event Processing has emerged as a hot technology for the financial markets, and its flexibility has been leveraged in applications as diverse as market data cleansing, to algorithmic trading, to compliance monitoring, to risk management. CEP is a solution to many problems, which is one reason why the...