High Frequency Trade Board

Series 57 Registration Requirement Expanded for Algorithmic Trade Firms

Firms engaged in algorithmic trading strategies may wish to have their Chief Compliance Officer register as a Securities Trader or Securities Trader Principal.

June 2016 the SEC approved an amendment expanding the scope of persons required to register as “Securities Trader” as it pertains to firms engaged in Algorithmic Trading Strategy.   Rule amendment 16-21 applies to persons who supervise day-to-day activities or who are primarily responsible for design, development, or significant modification to algorithm systems. The rule is intended to ensure persons associated with these functions possess knowledge or and responsibility for the design and the intended trading strategy, as well as technological implementation. This registration requirement is expected to ensure system changes are designed with regulatory compliance in mind as well as business objectives.  

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High Frequency Trade Software

New Series 57 Registration – Impact on HFT dealers and Floor Traders

Many Exempt High-Frequency-Traders and Floor Traders are soon to be folded in to FINRA oversight by way of Series 57 registration requirement, and amendments to rule 15b9-1 and NASD 1032.

  • November 2015:  SEC approved FINRA proposal to replace Series 55 with new series 57 registration.

  • This revision marks a step toward costly changes for high frequency traders applying rule 15b9-1 which bypasses FINRA association.

  • Examinees are scheduled to take series 57 examinations as early as January 4, 2016.

 High Frequency Trade Software

Background of High Frequency Trader Securities 

Over time, the markets have undergone a substantial transformation, including the emergence of active cross-market proprietary trading firms, many of which engage in so-called high-frequency trading strategies. Often times business for these traders is not focused on an exchange floor but is responsible for a substantial percent of the trading volume in the off-exchange market. Many are not members of a national securities association because they have been able to rely on the broad proprietary trading exemption in Rule 15b9-1. With this in mind, series 57 registration was established.

Why was the series 57 trader securities license created? Read more

FINRA Video Update Apr 2015

Approved Changes to Public Communications Rules

FINRA Board approves of proposed amendments to Communications with the Public Rules 2210, including changes to Rule 2214 (Requirements for the Use Investment Tools Analysis) and Rule 2213 (Requirements for the Use of Bond Mutual Fund Volatility Ratings).

FINRA Video Update Apr 2015Thursday April 16, 2015 – FINRA Video Update and letter from the Chairman and CEO addresses the approval. The proposed amendments would eliminate certain filing requirements that are low-level risk to investors. According to Jack Brennan, changes to requirements include removing the filings requirement of Shareholder reports, because they are already filed with the SEC. Additionally they are looking at removing requirements for filing reports when discussing investment companies generically, and communications discussing investment analysis tools.

In the April 2015 Board Update Video, Jack Brennan goes on to explain that FINRA is making an effort toward modernizing rules, especially where there is low-level risk. The changes are intended to better align investor protection with economic impact.


Rule 2213 – Requirements for the Use of Bond Mutual Fund Volatility Ratings | FINRA proposes to narrow and refine the scope of disclosures required under Rule 2213.


Rule 2214 – Requirements for the Use of Investment Analysis Tools | Rule 2214 is proposed to be affected with regards to retail communication requirements.

These are the first set of rule changes to the Communications with the Public Rules as a result of FINRA’s retrospective rule review program launched April 2014. FINRA will issue a regulatory notice in coming months seeking public comment on the proposed changes. Stay tuned.

Read the Letter from Richard Ketchum dated April 16, 2015