Securities Law Updates | New Statutes, Regulations and Rules
January 20, 2010
SEC Proposes New Rule Prohibiting Naked Access and to Maintain Market Access Controls
Proposed Rule Banning Naked Access to Automated Trading System
2010-7, 1/13/2010
The Securities and Exchange Commission (“SEC,” or “Commission”) has proposed a new rule that would effectively prohibit broker-dealers from providing customers with “unfiltered” or “naked” access to an exchange or alternative trading system (“ATS”).
The SEC’s proposed rule would require brokers with market access, including those who sponsor customers’ access to an exchange, to put in place risk management controls and supervisory procedures. Among other things, the procedures would help prevent erroneous orders, ensure compliance with regulatory requirements, and enforce pre-set credit or capital thresholds.
Broker-dealers use a ‘special pass’ known as their market participant identifier (“MPID”) to electronically access an…
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