Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...
July 27 — Members of national securities exchange Investors' Exchange LLC won't risk enforcement action under 1934 Securities Exchange Act disclosure requirements if they don't provide the identity of the party they sold to or bought from to fill the customer's order ( IEX Exch. Grp., SEC No-Action Letter, 7/26/2016).
Instead, IEX members may state on customer confirmations that they acted as an “agent” and the order is executed in a trade with an anonymous party, the staff of the Securities and Exchange Commission's Division of Trading and Markets said July 26.
Rule 10b-10 requires a broker-dealer to provide customers with certain written disclosures before completing a transaction. One disclosure is the identity of the party the broker-dealer sold to or bought from to fill the customer's order. Broker-dealers have the option of providing the information on the customer confirmation or after receiving a written request from the customer.
IEX chief regulatory officer Claudia Crowley explained that trades are executed with total anonymity at IEX, therefore members won't know the identity of the party they sold securities to or purchased securities from. Without that information, members can't comply with Rule 10b-10's identity requirement, Crowley said. As such, IEX requested an exemption for its members from the identity requirement when they execute transactions through the exchange's electronic trading facilities.
Crowley assured the staff that the requested relief would only be applied in situations where both:
In granting relief, the staff noted that members must still comply with all other Rule 10b-10 requirements when confirming customer orders.
The staff also said IEX won't risk enforcement action under the '34 Act's record retention rules if broker-dealers rely on the exchange's retention of the identities of members that execute anonymous trades on IEX instead of making their own separate records.
The staff's response was signed by deputy chief counsel Paula Jenson.
To contact the reporter on this story: Antoinette Gartrell in Washington at email@example.com
To contact the editor responsible for this story: Phyllis Diamond at firstname.lastname@example.org
To view the no-action correspondence, visit: https://www.sec.gov/divisions/marketreg/mr-noaction/2016/investors-exchange-072616-10b10.pdf.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)