what's going on everyone charlie here we're going to talk about the cat system and some new otc or
over-the-counter requirements that are coming down the pipe now this rule has already been
approved um it's just waiting to be implemented by finra which they will provide a notice um when
they do so so the purpose of this one finra is proposing new finra rule 6439 requirements for
inter-dealer quotation systems to expand and enhance the obligations of member firms that
operate certain systems that regularly disseminate the quotations of identified broker dealers in otc
equity securities the proposed rule change also deletes the rules related to the otcbb which is
the over-the-counter bulletin board and ceases its operation altogether as further discussed below
some background on this section 15a of the act provides the finra among other things must have
rules governing the form and content of quotations for securities sold otherwise then on an exchange
which includes otc equity securities specifically section 15a paragraph b section 11
requires that such rules be designed to one produce fair and informative quotations two
prevent fictitious or misleading quotations and three promote orderly procedures for collecting
distributing and publishing quotations finra currently has in place extensive rules that
govern the activity of a member firm when they engage in quoting otc equity securities
for example the fender rules 6400 series quoting and trading in otc equities securities
among other things provides a regulatory framework that governs the form and content of quotations
and finra maintains rules of general applicability then govern quoting and trading practices
in the finra rule 5200 series which is titled quotation and trading obligations and practices
together the quotation governance rules
in addition to adopting and administering the quotation governance rules um historically since
1990 finra also expanded substantial resources or expended substantial resources on operating
the otcbb which is finra's inter-dealer quotation system available for use by broker
dealers to publish quotations and eligible otc equity securities the over-the-counter
marketplace was very different when finra the national association of securities dealers or
the nasd first established the otcbb at that time members largely relied on printed rather
than electronic media for obtaining quotation information and finra believed that the otcbb
would enhance the efficiency of pricing and foster competition within the inter-dealer market for a
particular security however given technological advancements since 1990 and the subsequent
increase in alternative electronic venues with more extensive functionality than the otcbb
the level of quotation activity occurring on the otcbb has continued to decline over the
past several years and is now non-existent in fact as of the date of this filing
the otcbb does not display or widely disseminate quotation information on any otc equity securities
so we're ceasing operations of otcbb and proposed new rule 6439 is basically what we are doing
while finra believes that the quotation governance rules continue to provide
important safeguards for investors and play an important role in furthering market integrity
in over-the-counter marketplace finra does not believe that the continued operation the otcbb
serves any benefit to investors or the marketplace and the resources being expended on maintaining
the otcbb system would be better directed elsewhere therefore finra is proposing to
delete the rules governing the otcbb and cease its operation and at the same time enhance the
regulatory obligations related to quotations and otc equity securities by proposing new rule
6439 which would govern the activities of member interdealer quotation systems
now the proposed enhanced requirements for member interdealer quotation systems
are number one to disclose written policies
and procedures relating to otc quotation data
or equity securities basically established and prominently disclosed to subscribers and
disclosed to prospective subscribers upon request its written policies and procedures related to the
collection and dissemination of quotation information and otc securities number two
established and prominently disclosed to subscribers it's non-discriminatory
written standards for granting access to quoting and trading on a system
number three establish written policies and procedures addressing subscriber
unresponsiveness with respect to the the display of firm quotations and otc equity securities
and the submission of reports to finra on a monthly basis that includes specified order
and response information number four to make available a written description of each otc equity
or quote related data including fees rebates discounts and cross cross-product incentives
lastly number five to provide info concerning the integrity of the system altogether
now supernote 21 here says where a system permits manual responses to order received
against a displayed quote unresponsiveness can occur currently finra is aware of only one
member entered dealer quotation system that does not match and auto execute and thus would
be subject to proposed rule 6439 c and d now why didn't they mention the name or what what
system this is because it's the adf facility of course you know the alternative display facility
yeah anyways all of this stuff right here are going to be required to be reported very soon
order level information the member enter dealer quotation system
the one that this whole rule is about because there's only one that applies to this
i will have to report buy sell security symbol security price the size of the order all or none
indicator yes or no all are known as a type of order order entry firm mpid the market
participant order receipt time the time it in force how long was sitting there response time
order response for example execute reject cancel executed quantity system generated order number if
any and position in queue for the quote how about that so this was approved on october 1st 2021
thanks to fidelity error finra's crime i almost called it fidelity's crime calculator no this is
finra's crime calendar it's different the rule changed to delete the rules related
to otc bulletin board that we just talked about and sees its operation and to enhance
the regulator regulation and quotations and otc securities what we just discussed uh this will
be implemented now it's approved but it's not implemented until sometime this quarter
quarter four uh finra is going to announce uh an implementation date at some point through their
website that's it for this one how about that fu adf i thought you weren't used to pieces of