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On April 7, 2016, the U.S. Securities and Exchange Commission (“SEC”) approved the Financial Industry Regulatory Authority (“FINRA”) amendment to National Association of Securities Dealers (“NASD”) Rule 1032 (Categories of Representative Registration). The amendment requires associated persons responsible for the design, development, or significant modification of algorithmic trading strategies to register as Securities Traders.
Under NASD Rule 1032(f), a registered representative must register with FINRA as a Securities Trader if such person is engaged in:
NASD Rule 1032(f) will now include associated persons engaged in an “algorithmic trading strategy” related to the activities noted above. The change defines an algorithmic trading strategy as “an automated system that generates or routes orders (or order-related messages), but shall not include an automated system that solely routes orders received in their entirety to a market center.”
FINRA’s examples of such strategies include:
The amendment requires all associated persons to complete the Series 57 qualification examination if they are:
FINRA will announce the effective date of the rule change no later than 60 days from April 7, 2016. The amendment will take effect no sooner than 180 days and no later than 300 days from April 7, 2016.