The two primary self-regulatory organizations in the United States today announced an agreement with 10 securities exchanges to consolidate the surveillance, investigation and enforcement of illegal insider trading.
Under the agreement, each exchange gives responsibility for the detection of insider trading to the Financial Industry Regulatory Authority (FINRA) for American Stock Exchange and Nasdaq-listed securities, and to NYSE Regulation Inc. for New York Stock Exchange- and NYSE Arca-listed securities, no matter where trading occurs.
Currently, each exchange conducts its own regulatory insider trading program and relies upon cooperation with other exchanges when potential insider trading is detected.
The agreement has been filed with the U.S. Securities and Exchange Commission for approval. Participants include the American Stock Exchange, the Boston Stock Exchange, the CBOE Stock Exchange, the Chicago Stock Exchange, the International Securities Exchange, the Nasdaq Stock Market, the National Stock Exchange, NYSE, NYSE Arca, the Philadelphia Stock Exchange and FINRA.
“This breakthrough agreement will allow NYSE Regulation and FINRA to implement across markets their state of the art insider trading surveillance and investigation programs for all listed securities in the United States,” stated ichard Ketchum, chief executive officer of NYSE Regulation and chairman of FINRA’s Board of Governors. “A focused, consolidated review strengthens our ability to prevent anyone from profiting from insider information.”
“While U.S. equity markets have always coordinated very well with each other to detect and investigate insider trading, this agreement takes insider trading surveillance to a new level because it consolidates within FINRA and NYSE Regulation what used to be 11 discreet programs at each market center,” said FINRA senior executive vp Stephen Luparello. “As a result, potential insider traders, whether acting alone or in concert with others, and regardless of where they trade in the U.S., will be more readily identified in this new, more unified structure.”
The SEC has published the agreement for public comment. “We have immediately published this proposal for public comment because of its potential to increase the likelihood that those who engage in insider trading will be caught and punished. This should send a strong warning to those who would undermine market integrity and undercut investor confidence for their own personal gain,” SEC chairman Christopher Cox said.
SEC proposes plan to enhance insider trading surveillance and detection
FINRA, NYSE Regulation to split responsibilities
- By: James Langton
- August 13, 2008 August 13, 2008
- 11:30