FINRA Proposed Rule Change Re Front Running of Block Transactions

FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq. May, 2012: Proposed Rule Change to Adopt FINRA Rule 5270 (Front Running of Block Transactions) in Consolidated FINRA Rule Book.

There are many variations of front running. Generally, front running is a practice whereby a securities trader takes a position to capitalize on advance knowledge of a large upcoming transactions expected to influence the market price. Likewise, block transactions involve large quantities of stock or large dollar amount of bonds held or traded. As a general guide, 10,000 shares or more of stock and $200,000 or more worth of bonds would be described as a block. However, these descriptions are for educational purposes only and are not designed to be complete in all material respects. If you have any questions relative thereto, you should contact a qualified professional.

http://www.finra.org/Industry/Regulation/RuleFilings/2012/index.htm

Financial Industry Regulatory Authority, Inc. (“FINRA”) (f/k/a National Association of Securities Dealers, Inc. (“NASD”)) recently filed with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to adopt NASD Interpretive Material (“IM”) 2110-3 (Front Running Policy) as FINRA Rule 5270 and amend the rule in several ways to broaden its scope and provide further clarity in relation thereto.