BATS Global Markets, Inc. (BATS) has signed an agreement with the Financial Industry Regulatory Authority (FINRA), the independent, non-governmental regulator for all securities firms doing business with the public in the United States, to provide cross-market surveillance services to BATS' four stock exchanges- BZX, BYX, EDGX and EDGA, along with certain other regulatory services.
By aggregating trading data from BATS with data from NASDAQ's, NYSE Euronext's and FINRA's equity markets, and the two exchanges previously operated by Direct Edge that were recently merged with BATS, FINRA will be able to conduct comprehensive surveillance across 99 percent of the market for U.S. listed equities. Presently, FINRA conducts cross-market surveillance for 90 percent of the listed equities market. Through comprehensive cross-market surveillance, FINRA is able to detect and deter instances where a market participant engages in potentially abusive conduct on two or more markets in an attempt to avoid detection. The expansion of FINRA's cross market surveillance program to 99 percent of the market by virtue of the inclusion of all of BATS' exchanges promotes the effectiveness of the program and further protects investors and market integrity.
Allowing for necessary technical and operational configuration changes, it is expected that BATS will be included in FINRA's cross market surveillance program during the first quarter of 2015. Effective immediately, FINRA will also perform examination and disciplinary services on behalf of BATS.
"We're pleased to sign this agreement with FINRA, adding to our existing robust program to help protect investors and oversee the integrity of our markets," said Tami Schademann, Executive Vice President and Chief Regulatory Officer of BATS Global Markets.
"FINRA's comprehensive cross-market surveillance patterns will soon cover nearly 100 percent 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.