Software vendor S3 just announced its newest iteration of its regulatory reporting software which not only provides both the buy- and sell-side with enhanced Rule 605 and 606 reporting, but now offers reporting capabilities for Rule 611 and RegSHO.
Part of the enhancement is a new user interface that allows clients to conduct more detailed analysis on those metrics required for SEC Rule 605 and 606 reporting, further validating the data that they submit to regulators. The enhanced portal allows firms to analyze their data at both summary and detailed levels, providing a greater level of accuracy, as customers can now drill down to a granular level of analytical detail to verify their data and comply with the reporting requirements.
According to chief executive Mark Davies, the upgrades are the result of a more complex and fragmented market structure has led to more stringent regulatory protocols, with broker-dealers and institutions now required to provide validation of execution quality and venue analysis under Rule 605 and 606.
In addition to Rule 605 and 606 capabilities, S3 has further built out its interface to offer analytics for SEC Rule 611, which was enacted to prevent trade-throughs. Clients utilizing the regulatory portal can view and analyze all historical trade-throughs, better enabling them to avoid the practice to ensure compliance with Rule 611. S3’s proprietary platform scans every trade and flags those that were executed outside the NBBO, for both options and equities.
As part of the enhancements to its regulatory compliance reporting suite, S3 is adding the ability for clients to monitor their own executions for any trade-through occurrences, including any exceptions under Rule 611. With the addition of this feature, the regulatory platform will offer both a comprehensive view of trade-throughs across the market, as well as streamlined visibility into any violations at their own individual firms.
“Incorporating trade-through data into our platform is crucial not only for our clients to comply with Rule 611, but also to enhance transparency,” Davies added. “The SEC has established exceptions to the trade-through provision such as intermarket sweep orders, and S3 allows clients to keep track of this often complex information. Our enhanced regulatory analytics platform provides a complete view of the options and equities markets so that they can quickly and easily identify any past Rule 611 violations, and better understand when exceptions to the rule occur.”
The final addition to S3’s regulatory software package is intelligence pertaining to Regulation SHO (RegSHO). RegSHO, adopted to address potentially abusive, “naked” short-selling, identifies short sales of securities at impermissible prices and restricts the prices at which those stocks may be sold. S3 provides clients with the full list of short-sale restricted securities in the market, and allows them to identify stocks on this restricted list that trade on either a downtick or an uptick. The software analytics suite identifies those specific executions during which a downtick occurs, providing an even deeper level of insight.
Additionally, S3 offers each customer a report identifying any restricted short-sales occurring in their own executions. As with Rule 611, there are certain exemptions to RegSHO listing, so monitoring every security and trade that has violated the regulation can be difficult. The holistic intelligence provided by S3’s RegSHO analysis software simplifies the information-gathering process so that clients can avoid short-selling restricted stocks, and thereby remain in full compliance with regulatory requirements.
