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.

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