FINRA Unscripted Market Structure and COVID-19
May 7th | 2020
On April 28, Tom Gira, FINRA's Executive Vice President of Market Regulation was featured on the organization’s podcast and talked about COVID-19 and its effect on market volumes and volatility and the impact on the regulator’s surveillance operations. Some highlights include:
Limit up/limit down bands were triggered more than 100x more than usual on March 18.
Limit up/limit down bands help keep trading in individual stocks orderly.
They are triggered in the “single digits or teens” in normal times.
In March 2020, about 6,000 stocks hit their Reg. SHO circuit breaker; in normal times, it is about 250.
Short sale circuit breakers apply the next day following a 10% decrease. If that happens, short sales are only allowed on an uptick.
Trade reporting systems are holding strong; only 0.01% of trades are coming in late.
In February 2020, equity market volume was about 120% higher than usual.
In April 2020, equity market volume has been about 81% higher than usual.
The corporate bond market has seen about a 9% increase in the trade volume; but about a 25% increase in the value of that trading (par value), which means more big trades.
Surveillance impact varies depending on the pattern; increases range from 6% to 167%.
Best Execution alerts in the fixed income market are up about 10%.
The Consolidated Audit Trail (CAT) is ready to go live and adding futures to it is on Mr. Gira’s wish list.