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Regulators Set Sights on Proprietary Trading

Proprietary trading is the next target area for the Financial Industry Regulatory Authority, which is preparing enforcement cases against certain of these types of firms.

Proprietary trading is the next target area for the Financial Industry Regulatory Authority, which is preparing enforcement cases against certain of these types of firms. The self-regulatory organization is slated to file charges in which it will allege that prop desk traders have exploited gaps in their firms’ trading systems to trade through their limits, according to James Shorris, acting chief of FINRA enforcement.

The excessive trading created risks for their firms, Shorris told delegates at a seminar hosted by the Securities Industry and Financial Markets Association’s compliance and legal division. Shorris said that in at least one instance the gaps existed because the firm used more than one system to execute trades and the limits weren’t properly aligned between the different systems. The cases should be filed in the coming months, he added.

— Compliance Reporter

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