Direct Edge, the third largest stock exchange operator in the US, has agreed with the independent, non-governmental regulator for all securities firms, Financial Industry Regulatory Authority (FINRA), to provide market surveillance services on behalf of Direct Edge’s two licensed stock exchanges.
Under this agreement, FINRA will have surveillance oversight of more than 90% of US equities trading volume. This nearly complete view of market activity will allow FINRA to expand its role as an investor guardian by identifying abusive activity across multiple markets.
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Allowing for necessary technical and operational configuration changes, Direct Edge expects the new arrangement will become operative in the fourth quarter of 2013. Currently, FINRA performs examination and disciplinary services on behalf of Direct Edge. With this agreement, all of Direct Edge’s third-party regulatory services will be consolidated with FINRA.
"The stock market ecosystem is tightly interconnected and its surveillance is well-served by FINRA’s holistic view of the market," said William O’Brien, CEO of Direct Edge. "Detecting trading patterns spanning multiple exchanges and other market centers will enhance market integrity and, in turn, boost investor confidence that improper conduct and bad actors can be detected and punished."
"This agreement significantly enhances FINRA’s ability to protect investors and ensure market integrity," said FINRA chairman and CEO, Richard Ketchum. "Our comprehensive cross-market surveillance patterns will soon cover over 90% of the listed equities market and allow FINRA to better pursue potential cross-market abuses and more quickly identify new threats to the fairness and integrity of our markets."
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