With a deal to provide cross-market surveillance services to BATS Global Markets, Inc.'s four exchanges, the Financial Industry Regulatory Authority (FINRA) will now oversee 99% of the U.S. equity market.
FINRA says that by aggregating trading data from BATS, which recently acquired two exchanges operated by Direct Edge, with data from NASDAQ, NYSE Euronext, it will be able to conduct comprehensive surveillance across 99% of the market for U.S. listed equities. With comprehensive cross-market surveillance, FINRA says it is able to detect instances where a market participant engages in potentially abusive conduct on two or more markets in an attempt to avoid detection.
It is expected that the BATS exchanges will be included in FINRA's cross-market surveillance program during the first quarter of 2015. It will also begin performing examination and disciplinary services on behalf of BATS, effective immediately.
"FINRA's comprehensive cross-market surveillance patterns will soon cover nearly 100% of the listed equities market. With this agreement, we will be better positioned to fulfill our mission of protecting investors by detecting and pursuing cross-market abuses and identifying new threats to the integrity of our markets," said Thomas Gira, FINRA executive vice president, market regulation.