FINRA Focus on Dark Pools and HFT

FINRA is vowing to increase its oversight of dark pools and high-frequency trading practices in 2013.

In FINRA’s 2012 Year-in-Review, Chairman and CEO Robert Ketchum said FINRA stands as “the first line of defense for investors through a comprehensive and aggressive enforcement program, supported by a realigned and more risk-based examination program and the provision, for the first time, of cross-market surveillance programs that more effectively detected electronic manipulative trading.”

FINRA’s focus on dark pools and high-frequency trading is part of a broader, global regulatory shift to increase public awareness and address long-term market structure concerns. Last year, the regulator “introduced a suite of surveillance patterns to further enhance oversight of trading in non-exchange-listed OTC equities” and will continue monitoring for “potential manipulative trading activity, such as frontrunning and marking the close.”

Pointing to its efforts of increasing transparency in financial markets, the regulator said it assessed $68 million in fines in 2012 and ordered a record $34 million in restitutions to harmed customers. “Protecting investors and helping to ensure the integrity of the nation's financial markets is at the heart of what we do every day,” Ketchum said.