India To Curb HFT and Algo Trading to Check Spoofing

Posted on July 6, 2015July 7, 2015 by admin

India is considering placing restrictions on HFT (high-frequency trading and algorithmic schemes to help check manipulation by traders.

The Securities and Exchange Board of India, the nation’s market regulator, is examining a lock-in proposal that prevents traders from canceling an algo order for a given period of time, the people said, asking not to be identified as they aren’t authorized to speak on the subject. Sebi is evaluating proposals to better manage algo trading, Chairman U.K. Sinha said Tuesday, without elaborating.

If you are interested in ivestment overseas in India, click here. Brokerdealer.com is the leading database for brokers looking to help you.

Regulators around the world are probing high-frequency trading structures after a series of mishaps and an illegal practice known as “spoofing” convulsed financial markets. In India, the CNX Nifty suddenly fell 2 percent on May 6 amid speculation algo trades sparked a sell-off, triggering closer scrutiny. The rising share of algo orders poses “systemic risks,” the Reserve Bank of India said last month.

High frequency orders worsened the so-called flash crash of May 2010, briefly wiping $862 billion from American equities, when Navinder Singh Sarao helped send the Dow Jones Industrial Average on a wild 1,000-point slide, according to U.S. authorities.

According to SEBI, the share of algo orders in total orders and the share of cancelled algo orders in the total number of cancelled orders was around 90 per cent. It also observed that volumes in algo trading and high-frequency trading increased substantially in the cash segment of the equity market to about 40 per cent of total trades in both the exchanges in March 2015.

Finra Fines Bolster BD Regulator’s Finances

Posted on July 1, 2015July 1, 2015 by admin

Finra, aka Financial Industry Regulatory Authority Inc, the broker-dealer industry’s regulator announced a major uptick in revenues and profits, including a 2-fold increase in revenue collected from fines imposed on brokerdealers and others.

Finra’s income for 2014 jumped more than $100 million, as a result of cost-cutting and revenue-generating measures, InvestmentNews reports.

In particular, the industry-funded watchdog doubled money raised through fines, despite a drop in the number of actions, while a voluntary retirement program ate into overall expenses.

Finra’s net income jumped to $129 million in 2014 from $1.7 million in 2013, according to the regulator’s annual report cited by InvestmentNews. Revenue increased from $900.7 million to $996.6 million. In large part, this was due to the $132.6 million collected in fines during 2014, compared to $60.4 million in 2013. While the number of monetary sanctions dropped from 754 in 2013 to 645 in 2014, the average fine soared from $80,100 to $205,600 in the same time period, according to the publication.

Finra also had a 5.8% return in its investment portfolio, which rose from $1.954 billion in 2013 to $2.076 billion in 2014. The regulator attributed this primarily to its fixed-income holdings, according to the newspaper.

Meanwhile, the authority cut its expenses from $998.9 million to $964.8 million from 2013 to 2014. This was helped by 176 employees taking voluntary retirement, according to the report, says InvestmentNews.

Mind you, the number of Finra executives earning $1 million or more went up, from four in 2013 to seven last year. And its member firms each got a $1,200 rebate to offset the regulator’s annual gross-income assessment.

To read the full article, click here.

JOBS Act Curtain Call: Main Street Growth Act

Posted on June 29, 2015 by admin

This post was written by Pete Hoegler, Washington DC-based Social Media intern for The JLC Group.

Three years after the JOBS Act was passed, it seems that Washington is back for more–a curtain call if you will–making it easier for small ventures to raise capital.

The House Financial Services Committee in early June floated a draft bill that would allow the creation of “venture exchanges” tailored to the needs of small companies looking to raise money. In many ways, the success of the JOBS Act hinges upon the creation of such markets. A healthy secondary market created liquidity that is critical to building investor confidence and creating a robust alternative to the global markets that today are dominated by enormous corporations.

If you are looking for a broker-dealer to get you started, click here. Brokerdealer.com is the leading database for dealers around the world.

The new proposed venture exchange laws are aimed at increasing access to liquidity for early stage investors in private startups and small businesses (some of which could be JOBS Act enabled investors), as a lack of liquidity was a concern voiced by some surrounding the new laws for equity crowdfunding with non-accredited investors.

Investors in technology startups, for example, are likely to have to hold their position in any one investment for an average of 7 years. Creating opportunities for selling private stock in a startup investment sooner through venture exchanges has the potential to reduce some of the early stage investment risks.

These new venture exchanges could create markets that allow early investors who invested via equity crowdfunding to trade shares far before any kind of liquidity event like a public offering (IPO) might take place, spelling an opportunity for liquidity for those early investors.

The number of IPOs has gone from an average of 311 from 1980-2000 down to an average of 99 IPOs each year from 2001-2011 so opening up other alternatives for liquidity will de-risk the growing number of startup investments happening online.

This is yet another step towards reforming our capital markets. The first step was to enable access, and was addressed by Titles II, III & IV of the JOBS Act. So regardless of your opinion on this matter, the summer is shaping up to be an interesting time for equity crowdfunding investors, accredited and non-accredited alike.

SEC Busts Boca Raton For Unregistered Broker-Dealer Activity

Posted on June 27, 2015 by admin

The Securities and Exchange Commission said Tuesday that it has charged two firms with illegally brokering more than $79 million of investments from foreigners seeking U.S. residency through the government’s EB-5 Immigrant Investor Program.

The charges, the first against brokers handling investments in the EB-5 program, follow earlier SEC actions against fraudulent EB-5 offerings.

To get connect with Brokers and Investors today, click here. Brokerdealer.com is a great opportunity for better investments.

Ireeco LLC, originally of Boca Raton, Florida, and its successor Ireeco Ltd., a Hong Kong-based company operating in the U.S., were charged with acting as unregistered brokers for 158 EB-5 investors. The EB-5 program, administered by the U.S. Citizenship and Immigration Services (USCIS), provides a path to legal residency for foreigners who invest directly in a U.S. business or private “regional centers” that promote economic development in specific areas and industries, the SEC states. According to the SEC’s order, Ireeco LLC and Ireeco Ltd. used their website to solicit EB-5 investors, some of whom were already in the U.S. on a temporary visa.

The two companies offered to help potential EB-5 applicants choose the right regional centers. The centers paid the companies commissions of about $35,000 per investor once U.S. Citizenship and Immigration Services approved the green card petition, according to the SEC.

To read the full article by the South Florida Business Journal, click here.

Rules on Foreign Finders Incorportated In Recent SEC Approval

Posted on June 25, 2015 by admin

The longstanding rules on foreign finders – when a brokerage firm can pay transaction-based compensation to a non-registered foreign finder – will be incorporated into new FINRA Rule 2040, effective August 24, 2015.

Rule 2040(c) replaces NASD Rule 1060(b) and NYSE Interpretation 345(a)(i)/03, and provides that a member firm and persons associated with a member firm may pay transaction related compensation to non-registered foreign finders where the finders’ sole involvement is the initial referral to the member firm of non-U.S. customers, and the member firm complies with all the conditions set forth in the rule.

If you are in need for additional assistance as a result of FINRA rule 2040, click here. Brokerdealer.com is a global database to find a brokerdelaer that can help you.

Based solely on its activities in compliance with Rule 2040(c), a foreign finder would not be considered an associated person of the member firm. However, unless otherwise permitted by the federal securities laws or FINRA rules, a person who receives commissions or other transaction-based compensation in connection with securities transactions generally has to be a registered broker-dealer or an appropriately registered associated person of a broker-dealer who is supervised by a broker-dealer. Member firms that engage foreign finders would be required to have reasonable procedures that appropriately address the limited scope of activities permissible under such arrangements.

Where an arrangement with a foreign individual goes beyond initial referrals, the member firm may register that individual as a foreign associate under NASD Rule 1100. Foreign associates must conduct all of their activities outside the US and cannot engage in any securities activities with US persons. Although deemed an associated person for whom a Form U4 must be filed, a foreign associate is not required to pass a qualifying examination. For arrangements with foreign groups whose activities for foreign customers go beyond the initial referral to the member, registration of a foreign branch may be an alternative. To the extent a foreign finder solicits or negotiates with US persons, entering into a 15a-6 agreement may be a viable alternative.

To read the full article, click here.