NYSE Regulation And FINRA Announce Agreement With Ten U.S. Exchanges To Strengthen Surveillance, Investigation, And Enforcement To Prevent Insider Trading

The nation’s primary self-regulatory organizations for the securities industry – NYSE Regulation, Inc. and the Financial Industry Regulatory Authority (FINRA) – today announced an agreement with ten U.S. exchanges to strengthen investor protection by consolidating the surveillance, investigation, and enforcement of insider trading in equity securities.

Under the agreement, each exchange gives responsibility for the detection of insider trading to NYSE Regulation for New York Stock Exchange- and NYSE Arca-listed securities, and to FINRA for Amex- and NASDAQ-listed securities, no matter where trading occurs in the United States. 

Market centers participating in the agreement, which has been filed with the Securities and Exchange Commission (SEC ), are the American Stock Exchange, Boston Stock Exchange, CBOE Stock Exchange, Chicago Stock Exchange, International Securities Exchange, NASDAQ Stock Market, National Stock Exchange, New York Stock Exchange, NYSE Arca, Philadelphia Stock Exchange, and FINRA. 

“This breakthrough agreement will allow NYSE Regulation and FINRA to implement across markets their state of the art insider trading surveillance and investigation programs for all listed securities in the United States," said Richard G. Ketchum, Chief Executive Officer, NYSE Regulation, Inc., and Chairman, FINRA. “A focused, consolidated review strengthens our ability to prevent anyone from profiting from insider information.”           

“While U.S. equity markets have always coordinated very well with each other to detect and investigate insider trading, this agreement takes insider trading surveillance to a new level because it consolidates within FINRA and NYSE Regulation what used to be eleven discreet programs at each market center,” said FINRA Senior Executive Vice President Stephen Luparello. “As a result, potential insider traders, whether acting alone or in concert with others, and regardless of where they trade in the U.S. , will be more readily identified in this new, more unified structure.”

Currently, each exchange conducts its own regulatory insider trading program and relies upon cooperation with other exchanges when potential insider trading is detected. Both NYSE Regulation and FINRA operate highly sophisticated surveillance programs to identify potential insider trading on a real-time basis. When suspect trading activity is identified, regulatory staff conducts an in-depth review using advanced analytical tools, news reports, and other sources of information. 

The agreement was made pursuant to Section 17(d) of the Securities and Exchange Act of 1934, Section 15 U.S.C. §78q(d), and SEC  Rule 17d-2, that allows the SEC  to approve plans for the allocation of regulatory responsibility among self-regulatory organizations.