FINRA and BATS Sign Regulatory Service Agreement; FINRA to Conduct Surveillance for Nearly 100 Percent of U.S. Equities Trading

FINRA announced that it signed an agreement with BATS Global Markets, Inc. (“BATS”) to provide cross-market surveillance services to BATS’ four stock exchanges – BZX, BYX, EDGX and EDGA – along with certain other regulatory services.

According to the press release, this will increase the percentage of the market that FINRA surveils from 90% to 99%. 

Effective immediately, FINRA will also perform disciplinary and examination services on behalf of BATS. It is expected that BATS will be included in FINRA’s cross-market surveillance program during the first quarter of 2015.

Lofchie Comment:  The fact that FINRA now has an effective monopoly on “self-regulation” raises an interesting question as to the whole concept.  What does it mean when we say that the securities markets are self-regulated when we have a system of for-profit exchanges that have engaged a single organization (which is itself closely regulated by the government) to conduct the exchanges’ self-regulation?

See: FINRA Press Release.


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