Regulatory Outlook | 03.24.21
FINRA Warns Brokers on Their Order Execution Obligations
FINRA has released a notice regarding trading halts for GameStop shares, reminding broker-dealers what their best execution and order flow obligations during stock market instability. The regulator said firms must be prepared to "handle customer orders fairly, consistently, and reasonably at all times," despite market volatility. The notice adds that broker-dealers “are not obligated to receive or accept orders from customers where the firms believe that the associated compliance or legal risks are unacceptable, and there may be situations where firms determine they must change their order handling procedures to restrict the entry or acceptance of customer orders to limit the firm’s exposure to extraordinary market risk." Concerning policy changes to best execution, FINRA said any changes must be “on fair, consistent and reasonable terms."
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