MFA issued the following statement from MFA President and CEO, Bryan Corbett, in response to the U.S. Securities and Exchange Commission (SEC) adopting market structure amendments. The reforms implement half-penny tick sizes, reduce access fees, and accelerate the adoption of amended “new round lot” and “odd-lot information” definitions.
“The market structure amendments will enhance U.S. capital markets and all investors will benefit from the move to half-penny tick sizes. It will improve market liquidity, efficiency, and resiliency and lower costs for market participants. The adopted transparency amendments will increase access to useful market information that will benefit the SEC, markets, and investors, including alternative asset managers and their beneficiaries like pensions, foundations, and endowments.” — Bryan Corbett, MFA President and CEO
FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.
This week, the SEC approved historic changes to Reg NMS in a 5-0 vote, aiming to promote more competitive pricing and reduce investor costs on the $55 trillion U.S. equities markets.
Some market participants and observers are wary of how the changes will impact liquidity and trading costs, but others say they should help stock exchanges compete with off-exchange trading venues, which represent nearly half of trading volume and can already offer smaller price increments.
John Ramsay
According to John Ramsay, Chief Market Policy Officer, IEX, amending 19-year old rules is a complicated task: “In our opinion the SEC took the time that it felt it needed to get the answers right and therefore secure a 5-0 Commission vote.”
The fact that it was unanimous reflects how hard the SEC worked to take into account the comments of many investors and industry participants, he noted.
“At IEX, we believe Reg NMS modernization will enhance capital markets,” Ramsay told Traders Magazine.
Khody Azmoon, CEO and co-founder, BLOX Markets, added that although “we and others initially expected this to be addressed in Q2”, the SEC was clear about adhering to their established rule-making process and “wouldn’t rush for political reasons ahead of the next election”.
“To their credit, they managed to finalize it before the end of Q3, even when some in the industry were unsure if that timeline was feasible,” he said.
IEX believes there will be definite advantages to investors in terms of obtaining lowering trading costs, lowered fees to access exchange quotes and other benefits.
“We believe that the market more generally will benefit from an updated set of requirements that are designed to meet the trading needs of 2024 rather than 2005 when the rules were put in place,” he said.
In addition, IEX believes that this policy will create more incentives for exchanges to compete among each other on the basis of quality of execution, not just on the basis of variations in pricing.
“We hope that it will reduce some of the crazy complexity that exists in exchange pricing schedules now and encourage attention on where it matters most, which is what is the outcome for investors,” Ramsay said.
Khody Azmoon
Meanwhile, BLOX Markets believes the underlying retail investor will gain the most from these changes.
“Their execution quality will improve, while intermediaries such as wholesale market makers may bear the cost through tighter spreads and lower exchange rebates,” Azmoon said.
“We have a positive outlook on the equity market structure amendments regarding Tick Sizes, Access Fees, and Transparency of Better Priced Orders, as these changes are likely to benefit the underlying retail investor the most,” he added.
When asked if IEX expects any other changes in market structure until the end of the year, Ramsay said: “We don’t have a crystal ball into what the regulators may specifically be thinking about but we don’t foresee any significant new initiatives affecting equity markets to be proposed near-term.”
Azmoon added: “We’ve heard that the Regulation Best Execution proposal is a priority for Chair Gensler and that he intends to advance it. However, the SEC has expressed in the past that since it impacts multiple asset classes, it requires careful consideration. So, we’ll have to wait and see.”
Financial institutions handle many kinds of sensitive data, including personal data such as client social security numbers, transactional data like bank account and credit card passwords, trade secrets, and wealth planning details. This confidential information makes the financial industry a prime target for cybercriminals. While this isn’t a new revelation, recent trends reveal an alarming increase in the sophistication and frequency of attacks.
The consequences of a security breach can be catastrophic, including financial loss and damage to brand reputation and customer trust. According to IBM, the global average cost of a data breach in 2024 is $4.88M, a 10% increase from last year and the highest it’s ever been. For financial institutions, the cost can be even higher when factoring in regulatory penalties, legal fees, and the loss of customer trust. The recent CrowdStrike software outage also serves as a reminder of how a single vulnerability can disrupt operations worldwide. The need for robust cybersecurity measures has never been more critical as the sector becomes more reliant on cloud-based SaaS technologies and complex IT environments.
Considering these significant issues, the cost of a breach goes beyond immediate financial losses. Firstly, a recent report found that it takes 41% of organizations more than a week to restore service during an outage. Then, there’s the long-term impact on customer loyalty and brand reputation, which can be devastating. In an industry where trust is paramount, a single security failure can have far-reaching consequences.
An effective strategy for mitigating breach risks is through rigorous quality assurance (QA) and testing practices. No longer a mere support function, QA and testing have transformed into critical strategic components that have evolved within finance’s DevOps pipelines. Testing and quality professionals play an important role in preventative cybersecurity initiatives during the development process. If all goes well, they enable a quicker, smoother, and more secure product release. If they fail to pinpoint vulnerabilities during development, affected companies can face severe consequences from increasingly strict regulatory authorities.
DevSecOps and Shift-Left Testing Integrating Security, QA, and DevOps is crucial for advancing software security. In the past, security was largely the domain of dedicated security teams at the end of the development process, with QA and development playing minor roles in ensuring releases were safe and secure. However, a more integrated approach has emerged as the industry has evolved. Coined “DevSecOps,” this term encapsulates this mature, security-forward stance, where security is not just a responsibility of the security team but is a shared priority across the entire organization in every phase of the development pipeline.
DevSecOps embraces “shift-left” methods, meaning that security testing is integrated early in the software development lifecycle. By adopting this approach, financial institutions can proactively identify and address vulnerabilities before they escalate into costly breaches. This collaborative effort ensures that while security teams may not have the bandwidth or expertise to thoroughly test a release, QA and development teams can contribute effectively by integrating security-focused practices throughout the development process.
This methodology aligns seamlessly with the financial industry’s emphasis on speed and efficiency. Identifying and remedying security risks can expedite time-to-market while enhancing system reliability. Traceability is also crucial for strong QA, helping to prevent outages and data breaches. By integrating security testing early in development, organizations can fortify their software, reducing the likelihood of costly disruptions and data loss.
Additionally, while QA primarily identifies and fixes bugs in the software, cybersecurity experts focus on finding security weaknesses that could be exploited. By adding security testing, like Mobile Application Security Testing (MAST), into the QA process, teams can better address security risks, understand the importance of security, prioritize preventing threats, and improve software quality. This approach boosts the overall quality and reliability of the software.
End-to-End Visibility: A Key to Success As the financial sector evolves, the need for end-to-end visibility in QA and testing processes is becoming increasingly important. Innovative testing platforms offer comprehensive solutions that give QA teams the tools to centralize test management and share insights across the entire organization. This level of transparency and collaboration is essential for creating a culture of continuous improvement and ensuring that all stakeholders are aligned on security priorities.
For financial institutions, centralized test management is particularly valuable because it allows for creating scalable, repeatable workflows that can be seamlessly integrated into existing DevOps pipelines. This streamlines the testing process and promises that all necessary security measures are in place before deploying software. Such oversight is critical in an industry where a single vulnerability can have devastating consequences.
QA: The Backbone of Financial Cybersecurity Financial professionals and their institutions have a business and moral obligation to ensure their client’s sensitive data doesn’t get into the wrong hands. To cement this, they must elevate their QA and testing strategies. These organizations can proactively identify and mitigate vulnerabilities by integrating robust security measures into the development lifecycle through shift-left testing and granular controls. Adopting cutting-edge testing platforms will strengthen their defenses against threat actors and ensure they thrive in the digital age with a proactive, security-first approach that reduces the risk of breaches and guarantees customer trust.
About the Author:
Having nearly a decade of experience in the B2B tech space, Jorge Spratley brings expertise from diverse industries, including retail, eCommerce, EdTech, and Fintech. With a background in Psychology, Business Communication, and Computer Science, Jorge’s global experience in Portugal, the UK, and Australia fuels his passion for innovation. He’s dedicated to delivering impactful solutions for QA teams and driving product excellence.
The Canadian Securities Administrators (CSA) have published for comment a series of proposed amendments aimed at modernizing the continuous disclosure regime for investment funds.
These proposals are designed to provide investors with more focused and valuable disclosure while reducing the regulatory burden on investment fund managers.
The CSA proposes to replace the existing annual and interim Management Report of Fund Performance (MRFP) with a new annual and interim Fund Report.
Stan Magidson
The proposed Fund Report was developed using behavioural insights research, which provides information on how people think, behave and make decisions.
This included carrying out rigorous investor testing aimed at comparing the effectiveness of several alternative proposed versions of the Fund Report against a sample MRFP.
“These amendments reflect our commitment to ensuring that investors have access to disclosure that includes appropriate information that is more likely to be read and understood and is easier to apply when making investment decisions,” said Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission.
“By streamlining disclosure requirements, we aim to reduce the regulatory burden on investment fund managers while enhancing the overall quality of information available to investors.”
Two other continuous disclosure-related proposals being made are to:
Provide exemptions from certain conflict of interest reporting requirements in securities legislation if other similar requirements are satisfied.
Eliminate some required class- or series-level disclosures from investment fund financial statements that are not required by International Financial Reporting Standards.
The CSA is also making two additional proposals to:
Reference the term Fund Expense Ratio (FER), which combines the management expense ratio and the trading expense ratio of an investment fund, in the Fund Facts and the ETF Facts.
Make minor editorial and other revisions to the simplified prospectus form (SP Form).
The CSA invites comments on these proposals, which can be found on CSA members’ websites. The 120-day comment period closes on January 17, 2025.
The investor testing report that outlines the results of the behavioural insights research is being published separately and can be accessed on the CSA Secretariat’s website and the websites of some CSA members.
The British Columbia Securities Commission (BCSC) is not publishing the proposed amendments for comment at this time. BCSC Staff anticipate doing so following the British Columbia provincial general election.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
Nasdaq Private Market (NPM), a provider of secondary liquidity solutions, has launched the next-generation NPM SecondMarket platform, the first platform to offer this breadth of combined services across each segment of the private market ecosystem including private companies, employees, investors, and intermediaries.
Tom Callahan
“We are proud to officially launch SecondMarket. Our new platform will facilitate wealth creation events for millions of private company employees and investors. This disruptive technology benefits private companies and their employees by making transacting private shares faster, cheaper, easier, and more secure. SecondMarket will help unlock capital in the $3.5 trillion private market to power and accelerate the innovation economy,” said Tom Callahan, Chief Executive Officer, Nasdaq Private Market.
In designing the new SecondMarket, NPM drew upon a decade of experience from facilitating over $55 billion in volume for nearly 200,000 eligible private company employees and investors. It features custom tools and data for the most sophisticated CFO or professional investor, while at the same time delivering intuitive technology that simplifies the process of selling private shares for millions of private company employees. Importantly, transactions are facilitated in alignment with private companies.
As private companies increasingly embrace secondaries to offer essential liquidity to employees, NPM has significantly enhanced its functionality to meet their evolving needs. In parallel, NPM has invested millions of dollars into the new SecondMarket to better serve private market investors and employees alike. The objective is to promote innovation by bringing greater fairness, efficiency, and transparency to this essential multi-trillion-dollar asset class. Data privacy is of paramount importance at NPM, and the platform is designed to maintain the ongoing confidentiality of sensitive client data.
NPM SecondMarket consists of four main components:
The SecondMarket Company Workstation is NPM’s next-generation platform that streamlines the complex process of structuring and facilitating tenders for the purpose of offering liquidity to private company employees and investors. Its cutting-edge technology removes friction from the process, saving time and resources for CEOs and CFOs of the world’s most innovative private companies. Powerful new tools and data support and educate participants, structure programs, integrate with cap tables, manage order books, fast-track settlement, and facilitate payments.
The SecondMarket Employee Workstation empowers private company employees to sell shares via an end-to-end, electronic, self-service platform connected to an active network of institutional buyers. Current and former employees can easily add holdings, research and estimate the value of shares, anonymously negotiate with buyers, and have funds wired directly to their account. If companies permit share transfers, NPM helps shareholders sell shares for a low, flat 1% commission, a fraction of what is charged by other platforms. If companies do not permit share transfers, NPM will not facilitate trades.
The SecondMarket Investor Workstation is designed meet the needs of the most sophisticated professional investors. It features advanced yet easy-to-navigate trading tools, an intuitive IOI and watchlist submission process, instant portfolio upload functionality, essential and actionable data, real-time negotiations, and powerful, proprietary settlement technology to simplify the transfer of shares and funds, all for a low, flat 1% commission as well.
Tape D Data is a quantum leap forward in bringing transparency and fairness to the private markets, offering private share price estimates, reported trade levels, historic bids and offers, primary round history, 409A valuations, mutual fund marks, cap table analytics, and waterfall analysis. Its extensive document library provides investors with easy access to publicly available, critical, but hard-to-source documents such as Certificates of Incorporation, federal and state filings, Form Ds, and annual reports.
(Introducing EXECUTION MATTERS, a new Traders Magazine content series focused on the topics most important to traders and technologists in US equities and options markets. EXECUTION MATTERS is produced in collaboration with Lime Trading Corp.)
The next quadruple witching event, scheduled for Friday, September 20, will see the simultaneous expiration of four major financial instruments: stock index futures, stock index options, stock options, and single stock futures.
These quarterly expirations—occurring in March, June, September, and December—often lead to a surge in market activity, as traders rush to close or roll over positions, particularly in the final hour of trading. On March 17, 2023, for instance, over 9.35 billion S&P 500 contracts were traded, followed by 8.22 billion contracts on December 15, 2023, marking the two highest-volume days of the year.
For electronic brokers and trading infrastructure providers, quad witch days are comparable to Black Friday in retail: a deluge of orders and messages must be handled with speed, precision, and reliability. Failure to perform seamlessly under these conditions can lead to costly delays, frustrated traders, and ultimately, lost business.
“Quad witch is one of the biggest trading events of the year,” said Johan Sandblom, President & Head of Business Development at Lime Trading Corp. “To handle it well, clients need to rely on technology that is optimized both for performance and throughput.”
Johan Sandblom, Lime Trading
“Trading of stock index futures, stock index options, stock options, and single stock futures increases in four special sessions a year,” financial services company Santander said in a 2023report about quadruple witching. “The concurrent expiry dates “are investors’ last chance to exercise their options, confirm their futures or extend contracts to the next expiry date. In the last hour of trading, markets are flooded with orders, raising volatility,” the report stated.
Recent market events underscore the importance of reliable trading systems. On August 5, 2024, an early market downturn triggered outages at major retail brokerages including Charles Schwab, Vanguard, and Fidelity. While retail investors faced delays and missed opportunities, the stakes are far higher for professional traders, hedge funds, and firms relying on high-frequency strategies during peak events like quadruple witching.
A system failure under such conditions could prove catastrophic for firms whose business depends on uninterrupted, high-throughput execution. “Everyone is good when there’s nothing going on,” Sandblom pointed out. “What’s critical—and often differentiating—is the ability to maintain performance and avoid slowdowns on the highest-volume days.”
Lime Trading’s low-latency platform is engineered to handle these exact conditions. “Our systems are designed to meet the demands of systematic and electronic traders,” said Sandblom. “On the most active trading days, we routinely process over 30 million messages, with much of the volume concentrated toward the market close. The platform enables our clients to execute their strategies without bottlenecks, even during events like quad witch.”
Miami International Holdings (MIH), a technology-driven leader in building and operating regulated financial markets across multiple asset classes, has entered into a licensing agreement with Bloomberg Index Services to develop a suite of index futures, options on futures, and cash options products based on Bloomberg Indices’ portfolio of benchmarks.
Thomas P. Gallagher
MIH will initially offer a number of equity index products which will be exclusively listed and traded on MIH’s exchanges, subject to regulatory approval.
“Our collaboration with Bloomberg Indices will provide the financial industry with access to a broad range of futures and options products designed to meet the needs of both retail and institutional equity investors,” said Thomas P. Gallagher, Chairman and Chief Executive Officer of MIH.
“We are very encouraged with the long-term potential for our collaboration, particularly given the depth and breadth of Bloomberg’s global distribution capabilities and the growing trend of asset managers, funds, and other investors benchmarking to Bloomberg indices,” he said.
Bloomberg offers a complete set of global equity index families covering over 99+% of the eligible free float market cap in 48 developed and emerging countries.
Bloomberg Equity Indices are available in global, regional, country, and sector exposures, in various currencies and returns (price/total/net) for clients to utilize for benchmarking, asset allocation and product creation. Since launching its suite of equity index products in 2019, Bloomberg now calculates more than 6,000 global equity indices using transparent, rules-based methodologies.
“Bloomberg Indices has invested considerable resources in developing a suite of innovative equity benchmarks covering a broad range of geographies, sectors and industries using our rules-based and transparent methodology,” said Dave Gedeon, CEO, Bloomberg Indices.
“Our collaboration with MIH to offer financial derivative products based on Bloomberg equity indices will provide the global investment community with a new range of innovative tools to help manage its equity risk exposure,” he said.
Gallagher further added: “The combination of MIH’s expertise in operating futures and options exchanges and Bloomberg’s advanced index, calculation, research and distribution capabilities will bring much-needed competition to the equity index derivatives industry.”
IEX Group believes that its record of protecting market participants from adverse selection and maximizing best execution in equities will be an advantage when it launches an options exchange, subject to regulatory approval.
Bryan Harkins, IEX
Bryan Harkins, group president of IEX, told Markets Media: “IEX spent the last decade innovating to build technology that protects market participants from adverse selection and maximizes best execution, and this will be the foundation for our entry into options.”
Founded by the buy side, IEX built the first US equities exchange to power its order types with a machine learning-based mathematical formula, the Signal, also known as the crumbling quote indicator. The Signal predicts which way the market will move in order to protect customers from trading at a price that will imminently become stale.
If IEX receives regulatory approval, it will become the nineteenth US options exchange. In August this year Miami International Holdings launched the newest options exchange, MIAX Sapphire electronic exchange, which will be followed by a physical trading floor next year.
IEX’s proposed options exchange will be an electronic venue that will provide access to the entire multi-listed options market while relying on a pro-rata model. This will be the first time that IEX’s proprietary solutions in equities for risk management and markout optimization will be available for US options trading.
“We asked ourselves why the US needs another options exchange and there are three main reasons,” Harkins added.
The first is that options are one of the fastest growing asset classes in the world and experiencing quite a bit of innovation. Harkins argued that the overall options market is growing, so IEX does not look at entry into the options space as necessarily a zero-sum game.
Second, Harkins believes that the core competencies of IEX have direct applicability to help market participants in the options industry. Third, he said that IEX has people with an innovative mindset that obsess over improving outcomes for liquidity providers, which IEX has done since inception.
Before joining IEX in May this year, Harkins’ roles included head of markets at Cboe Global Markets overseeing equities, derivatives, and foreign exchange trading; and the president of BIDS trading.
Since Harkins joined, John Palmer, the former president of Cboe Digital, has also been hired to lead IEX’s efforts to build out its offerings and technology to serve new markets. Palmer will serve as head of options and lead the new exchange. He will continue reporting to Harkins, who will oversee both IEX’s equities exchange and the new options exchange.
Ronan Ryan, IEX
Ivan Brown, who was most recently head of options and business development at the New York Stock Exchange, will lead business development and product design for IEX’s new options exchange.
Ronan Ryan, co-founder and chief operating officer of IEX, said in a statement: “Bryan, John, and Ivan are proven operators who have built successful trading platforms across asset classes. We are committed to bringing together the best people in the trading industry to disrupt the status quo in options trading with a unique market architecture, highly differentiated products, and deep commitment to client relationships.”
Harkins said the project is well underway and the system is being developed. IEX has set its sights on launching the new exchange in 2025, pending regulatory approval, and expects to file its options exchange rules with the US Securities and Exchange Commission in the fall. It will require minimal effort for current members of IEX’s equities exchange onboard to this new venue.
Differentiation
IEX will need to differentiate itself in an already crowded options market.
“We have had detailed conversations with market makers and liquidity providers in the US options space, so we are not simply cloning what we are doing in equities,” Harkins added.
IEX feels its product will have applicability in helping established players better manage risk their quotes, and also for new entrants who Harkins said will find the product unique in helping them enter a market and provide quality liquidity.
Brown told Markets Media that IEX is in continuous dialogue with the industry and has been “encouraged” by the response.
“We want to make sure we bring the right intellectual approach that is consistent with the innovative path that IEX has taken over the last 10 years, but make sure that we are cognisant of the differences in market structure to maximize the effectiveness of what we bring to options,” added Brown
For example, in equities there are 10,000 to 11,000 listed instruments on any given day but in options, there are about 1.5 million strikes a day. Brown described options as a quote-driven market versus an order-driven market in equities.
Therefore, the central role of an options market maker is to provide two-sided quotes on all those instruments across multiple exchanges, which makes the adverse selection challenge even more acute. Additional priorities for the industry are determinism and certainty according to Brown.
Ivan Brown, IEX
He argued that if participants have more confidence in providing aggressive markets, this ultimately results in a better price for the end user. In addition, if market participants can price in less adverse selection into their quote, this drives better performance on the venue, and, ultimately, better results.
“IEX spent the last decade innovating to build technology that protects market participants from adverse selection and maximizes best execution, and this will be the foundation for our entry into options,” Brown added.
IEX has not yet arrived at the final pricing model, because Brown said it has been focusing on differentiation around functionality and the quality of performance and execution. He said: “Ultimately, we will land in a place where we are going to be competitive.”
Equities
In 2020 IEX Exchange also fully launched its D-Limit, discretionary limit order type. D-Limit uses the power of the IEX Signal to move an order out of the way if the price is about to become imminently stale i.e. the order avoids being “run over” when the price is unstable. Over $3.5 trillion of notional value has been traded using D-Limit since inception according to IEX.
Among US equities exchange operators IEX captures between 2.5% and 3% market share according to the firm. Last year IEX Exchange updated the signal and also expanded Version 6 into displayed trading.
Harkins said: “It is really impressive to see our growth in equities over the last few months that has been driven by the obsession over execution quality and enhancing our rebates.”
As of August, IEX’s displayed market share grew over 2.5x. This reflects our commitment to enhancing the IEX displayed trading experience, including updating our signal and rolling post-only functionality. Here's how our updates are driving results: https://t.co/kHewiLlnvL
IEX said it is the third largest displayed liquidity exchange in equities in terms of available liquidity. Harkins said this has “really popped” in the last six weeks as liquidity providers have increasingly adopted IEX’s order protection tools.
“They can trade more confidently and quote more aggressively, so we are leaning into this concept and excited by our momentum,” Harkins added.
Brown continued that the launch of the options exchange is coming at an exciting time for IEX.
“Our core principles in entering the options market are helping liquidity providers and market participants, and obsessing over improving outcomes, which is a playbook that came from equities,” Brown said.
Options growth
In the first seven months of this year, total exchange-traded options volume for the year was 100.16 billion contracts, up 98.4% from the previous period in 2023, according to trade body FIA.
Source: FIA
Harkins said options growth is being driven by increased retail adoption, continued innovation in ways to trade, continued innovation in the index space, and increased electronification. A lot of wealth management platforms are also increasingly using options to create a targeted outcome without having a big appetite for volatility.
“The industry also does a very good job of investor education and the utility of options to manage risk or to sometimes express a view in a more economic way than cash equities does,” he added.
Brown continued that increased adoption means options have become much more of a household name when people think about a tradable asset class, and even exchange-traded funds are incorporating options into their fundamental strategies.
“Growth comes from a confluence of factors that helps spin the flywheel of liquidity begetting liquidity,” said Brown.
The Securities and Exchange Commission has announced charges against 11 institutional investment managers for failing to file reports, known as Forms 13F, that they were required to file because they have discretion over more than $100 million in certain securities.
Jason Burt
“The integrity of the securities markets depends largely on firms providing accurate, timely information about their securities holdings and trading activity,” said Jason Burt, Director of the Denver Regional Office.
“These resolutions illustrate how seriously the Commission takes non-compliance as well as the benefits a firm may derive from self-reporting its non-compliance.”
Two of the entities, Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A. (Nationale-Nederlanden) and NEPC, LLC, were also charged with failing to file Forms 13H as required for large traders who trade a significant amount of exchange-listed securities.
All 11 firms agreed to settle the SEC’s charges. Nine of the firms will pay more than $3.4 million in combined civil penalties.
Two firms were not ordered to pay any civil penalties because they self-reported the violations at issue and otherwise cooperated with the SEC’s investigations, and another (NEPC, LLC) was not ordered to pay a civil penalty for its failure to file Forms 13H because it self-reported those violations and otherwise cooperated with the SEC’s investigations.
The institutional investment managers charged and their respective penalties are:
Ashton Thomas Private Wealth, LLC – $375,000
Azzad Asset Management, Inc. – $225,000
Bulltick Wealth Management, LLC – $175,000
Dixon Mitchell Investment Counsel, Inc. – no financial penalty
Financial Synergies Wealth Advisors, Inc. – $225,000
Focus Financial Network, Inc. – $475,000
Mason Investment Advisory Services, Inc. – $525,000
Nationale-Nederlanden – no financial penalty
NEPC, LLC – $725,000
TD Private Client Wealth, LLC – $475,000
Traphagen Investment Advisors, LLC – $225,000
The SEC’s investigations of Ashton Thomas Private Wealth, Azzad Asset Management, Bulltick Wealth Management, Financial Synergies Wealth Advisors, Focus Financial Network, Mason Investment Advisory Services, NEPC, TD Private Client Wealth, and Traphagen Investment Advisors were conducted by Michael Cates, Abigail Edwards, Jacqueline Moessner, and Jennifer Turner, under the supervision of Laura Metcalfe, Nicholas Heinke, and Jason Burt of the Denver Regional Office. The SEC’s investigation of Dixon Mitchell Investment Counsel was conducted by Erin East under the supervision of Stephen Donahue, Andrew Dean, and Corey Schuster of the Division of Enforcement’s Asset Management Unit. The SEC’s investigation of Nationale-Nederlanden was conducted by Caitlin Giaimo under the supervision of Celeste Chase, Sheldon Pollock, and Antonia Apps of the New York Regional Office.
More information about the Forms 13F and 13H requirements is available here:
Washington D.C., Sept. 18, 2024 — The Securities and Exchange Commission today adopted amendments to certain rules under Regulation NMS to adopt an additional minimum pricing increment, or “tick size,” for the quoting of certain NMS stocks, reduce the access fee caps for protected quotations of trading centers, increase the transparency of exchange fees and rebates, and accelerate the implementation of rules that will make information about the market’s best priced, smaller-sized orders publicly available.
The amendments are designed to reduce transaction costs and improve market quality for all investors and to help ensure that orders placed in the national market system reflect the best prices available for all investors.
Gary Gensler
“In 1975, Congress tasked the Securities and Exchange Commission with responsibility to facilitate the establishment of the national market system and enhance competition in the securities markets, including the equity markets,” said SEC Chair Gary Gensler.
“A lot has changed – in technology and business models – since we last took a comprehensive review of the national market system rules in 2005. Thus, it is incumbent upon us to update our national market system rules. The reforms we adopted today will help promote greater transparency, competition, fairness, and efficiency in our $55 trillion equity markets. That goes to the heart of the SEC’s mission. The reforms are pro-investors. They are pro-capital formation.”
Since the adoption of Rule 612 of Regulation NMS in 2005, there has been a marked increase in trading volume related to NMS stocks that are constrained by the minimum pricing increment under the rule. Many NMS stocks would likely be priced more competitively if not constrained by a market-wide minimum pricing increment of $0.01.
The amendments to Rule 612 establish a new, additional $0.005 minimum pricing increment for quotations and orders in NMS stocks that are priced at, or greater than, $1.00 per share. The tick size for all NMS stocks will be based on the Time Weighted Average Quoted Spread for the relevant NMS stock during a specified three-month Evaluation Period and thereafter assigned for a six-month period.
Further, the Commission adopted amendments to Rule 610 of Regulation NMS to reflect the new lower minimum pricing increment under Rule 612, address distortions associated with access fees and rebates under the existing access fee caps, address potential conflicts of interest, and increase the transparency of exchange fees, rebates, and other forms of remuneration. The amendments reduce the access fee caps for protected quotations in NMS stocks that are priced $1.00 or more to $0.001 per share. For protected quotations in NMS stocks priced less than $1.00 per share, the access fee cap will be 0.1 percent of the quotation price per share. In addition, Rule 610 will now require exchanges to make the amounts of all fees, rebates, and other forms of remuneration determinable at the time of execution.
Finally, to expedite the availability of information about the best prices for smaller-sized orders, the Commission accelerated the implementation of previously adopted definitions related to round lots and odd-lot information. These definitions were approved by the Commission in 2020, but their implementation has been delayed. In addition, the Commission adopted an amendment to the odd-lot information definition to require the identification of the best priced odd-lot orders that are available in the market.
The amendments will become effective 60 days after the publication of the adopting release in the Federal Register. For Rule 612, Rule 610, and the round lot definition, the compliance date will be the first business day of November 2025. For odd-lot information, the compliance date will be the first business day of May 2026.
QA and Testing: Finance’s Critical Cyber Defense
By Jorge Spratley, Product Manager, TestRail
Financial institutions handle many kinds of sensitive data, including personal data such as client social security numbers, transactional data like bank account and credit card passwords, trade secrets, and wealth planning details. This confidential information makes the financial industry a prime target for cybercriminals. While this isn’t a new revelation, recent trends reveal an alarming increase in the sophistication and frequency of attacks.
The consequences of a security breach can be catastrophic, including financial loss and damage to brand reputation and customer trust. According to IBM, the global average cost of a data breach in 2024 is $4.88M, a 10% increase from last year and the highest it’s ever been. For financial institutions, the cost can be even higher when factoring in regulatory penalties, legal fees, and the loss of customer trust. The recent CrowdStrike software outage also serves as a reminder of how a single vulnerability can disrupt operations worldwide. The need for robust cybersecurity measures has never been more critical as the sector becomes more reliant on cloud-based SaaS technologies and complex IT environments.
Considering these significant issues, the cost of a breach goes beyond immediate financial losses. Firstly, a recent report found that it takes 41% of organizations more than a week to restore service during an outage. Then, there’s the long-term impact on customer loyalty and brand reputation, which can be devastating. In an industry where trust is paramount, a single security failure can have far-reaching consequences.
An effective strategy for mitigating breach risks is through rigorous quality assurance (QA) and testing practices. No longer a mere support function, QA and testing have transformed into critical strategic components that have evolved within finance’s DevOps pipelines. Testing and quality professionals play an important role in preventative cybersecurity initiatives during the development process. If all goes well, they enable a quicker, smoother, and more secure product release. If they fail to pinpoint vulnerabilities during development, affected companies can face severe consequences from increasingly strict regulatory authorities.
DevSecOps and Shift-Left Testing
Integrating Security, QA, and DevOps is crucial for advancing software security. In the past, security was largely the domain of dedicated security teams at the end of the development process, with QA and development playing minor roles in ensuring releases were safe and secure. However, a more integrated approach has emerged as the industry has evolved. Coined “DevSecOps,” this term encapsulates this mature, security-forward stance, where security is not just a responsibility of the security team but is a shared priority across the entire organization in every phase of the development pipeline.
DevSecOps embraces “shift-left” methods, meaning that security testing is integrated early in the software development lifecycle. By adopting this approach, financial institutions can proactively identify and address vulnerabilities before they escalate into costly breaches. This collaborative effort ensures that while security teams may not have the bandwidth or expertise to thoroughly test a release, QA and development teams can contribute effectively by integrating security-focused practices throughout the development process.
This methodology aligns seamlessly with the financial industry’s emphasis on speed and efficiency. Identifying and remedying security risks can expedite time-to-market while enhancing system reliability. Traceability is also crucial for strong QA, helping to prevent outages and data breaches. By integrating security testing early in development, organizations can fortify their software, reducing the likelihood of costly disruptions and data loss.
Additionally, while QA primarily identifies and fixes bugs in the software, cybersecurity experts focus on finding security weaknesses that could be exploited. By adding security testing, like Mobile Application Security Testing (MAST), into the QA process, teams can better address security risks, understand the importance of security, prioritize preventing threats, and improve software quality. This approach boosts the overall quality and reliability of the software.
End-to-End Visibility: A Key to Success
As the financial sector evolves, the need for end-to-end visibility in QA and testing processes is becoming increasingly important. Innovative testing platforms offer comprehensive solutions that give QA teams the tools to centralize test management and share insights across the entire organization. This level of transparency and collaboration is essential for creating a culture of continuous improvement and ensuring that all stakeholders are aligned on security priorities.
For financial institutions, centralized test management is particularly valuable because it allows for creating scalable, repeatable workflows that can be seamlessly integrated into existing DevOps pipelines. This streamlines the testing process and promises that all necessary security measures are in place before deploying software. Such oversight is critical in an industry where a single vulnerability can have devastating consequences.
QA: The Backbone of Financial Cybersecurity
Financial professionals and their institutions have a business and moral obligation to ensure their client’s sensitive data doesn’t get into the wrong hands. To cement this, they must elevate their QA and testing strategies. These organizations can proactively identify and mitigate vulnerabilities by integrating robust security measures into the development lifecycle through shift-left testing and granular controls. Adopting cutting-edge testing platforms will strengthen their defenses against threat actors and ensure they thrive in the digital age with a proactive, security-first approach that reduces the risk of breaches and guarantees customer trust.
About the Author:
Having nearly a decade of experience in the B2B tech space, Jorge Spratley brings expertise from diverse industries, including retail, eCommerce, EdTech, and Fintech. With a background in Psychology, Business Communication, and Computer Science, Jorge’s global experience in Portugal, the UK, and Australia fuels his passion for innovation. He’s dedicated to delivering impactful solutions for QA teams and driving product excellence.