FINRA issues reminder to firms on promptly executing marketable customer orders

On Behalf of | Jan 27, 2022 | FINRA Compliance

The Financial Industry Regulatory Authority has issued a reminder to member firms pertaining to the execution of marketable customer orders. In Regulatory Notice 22-04, FINRA reminded the firms of their obligation to execute such orders fully and promptly, as well as their obligation to make sure their supervisory systems are designed to comply with this obligation.

FINRA said the notice was issued due to the fact that the trading of National Market System stocks has become increasingly automated. Under FINRA Rule 5310, a member must make every effort to execute a marketable customer order that it receives fully and promptly. But in its regulatory notice issued last week, the authority noted that “What constitutes “prompt” order handling must evolve as securities markets, and the technology underlying them, evolve, and firms’ compliance efforts to satisfy this requirement likewise must keep pace with these changes.”

With technology leading to increasing speed for orders and handling of NMS stocks, FINRA reminded firms that their order handling and supervisory systems should be consistent with industry standards. The authority published statistics from September 2021 showing that 97% of customer market orders in NMS stocks were executed in less than 100 milliseconds, and 99.94% of the orders were executed in less than five seconds.

At Lewitas Hyman, our attorneys fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry, including the SEC, FINRA, state securities regulatory agencies and other self-regulatory organizations. If your firm is facing an investigation from a regulatory agency, please contact our securities investigation lawyers at (888) 655 6002 or through our online contact form.

Share This