With the ex-clearing/dark pool data now being reported, it will be interesting to see what the non-DTC trading volume was for the week that nearly 5B shares changed hands.
It is advised to speak with FINRA and/or the SEC directly to get clarification and direction on what the meaning of the data is.
Also, it is important to note that OTC Link LLC is was granted an exemption from reporting dark pool data.
Has OTC Link LLC, in collaboration with OTCmarkets.com been profiting off of non-public information?
Trade Reporting Obligation for Certain Alternative Trading Systems – FINRA Rules 6183, 6625 and 6731
March 1, 2012
President OTC Link LLC 304 Hudson Street, 3rd Floor New York, NY 10013
Re: Application for Exemptive Relief from Trade Reporting Obligations
Dear Mr. Modeski:
The Market Regulation Department of FINRA (the “staff”) has received and reviewed your letter dated March 1, 2012, in which OTC Link LLC (“OTC Link”) requests exemptive relief from the FINRA trade reporting obligations pursuant to FINRA Rules 6183, 6625 and 6731.
Based on the information provided in your application, and conditioned upon OTC Link providing the items listed below, the staff has determined that OTC Link meets the specified criteria and hereby grants, pursuant to FINRA Rule 9610, OTC Link an exemption from the trade reporting obligation under FINRA Rules 6282(b), 6380A(b), 6380B(b), 6622(b) and 6730.
Within 90 days of the effective registration of OTC Link as a FINRA member, OTC Link must provide to FINRA a written attestation that it has entered into written agreements as required by FINRA Rules 6183(a)(3), 6625(a)(3) and 6731(a)(3) with all of its FINRA member subscribers. In addition, within 90 days of the effective registration of OTC Link as a FINRA member, OTC Link must provide to FINRA a sample of at least two such agreements. OTC Link has represented that it is making its best efforts to obtain the required written agreements as expeditiously as possible.1
Within 60 days of the effective registration of OTC Link as a FINRA member, OTC Link shall provide to FINRA data relating to the volume of trades, by security, executed by OTC Link subscribers using OTC Link (e.g., number of trades, number of shares traded and the total settlement value for each security traded) for the most recent calendar month. On a going forward basis, OTC Link must provide such monthly trade volume information to FINRA and such information must be received by FINRA no later than the 10th business day following the completion of each calendar month.
This exemption will be fully and finally effective upon the date that FINRA receives the written attestation described in Item 1 above. If OTC Link fails to provide such written attestation within this time frame, the exemption granted herein will be revoked unless otherwise expressly agreed to by FINRA.
This letter responds only to the issue you have raised based on the facts as you have described them, and does not address any other rule or interpretation of FINRA, or all the possible regulatory and legal issues involved. Any changes in the facts or representations as you have described them will require further consideration and may cause us to reach a different conclusion. You should contact FINRA immediately if there is a change in any of the facts or representations contained in your letter. In addition, this exemption is subject to modification or revocation if at any time FINRA determines that such action is necessary or appropriate for the protection of investors
Should you have any questions about this letter, please contact David Chapman in Market Regulation at (240) 386-4995.
Sincerely,
Jon Kroeper Senior Vice President Market Regulation Department
1 OTC Link is reminded that the firm must retain the written agreements pursuant to its books and records obligations under FINRA rules, the Exchange Act, and applicable Exchange Act rules, and must be able to produce them to FINRA upon request.
Who is OTC Link LLC, and why is a quoting source a registered broker-dealer and member of FINRA?
NEW YORK – March 8, 2012- OTC Markets Group Inc. (the “Company”), announced today that its wholly owned subsidiary, OTC Link LLC (“OTC Link”), has been approved as a broker-dealer member of FINRA™. OTC Link next plans to register with the SEC as an Alternative Trading System (“ATS”). As a broker-dealer and an ATS, OTC Link will operate the Company’s OTC Link interdealer quotation and messaging system. The Company anticipates that OTC Link will begin operating as an ATS late in the second quarter of 2012.
“We worked diligently with FINRA to ensure that FINRA membership, and OTC Link’s anticipated future status as an ATS, will not require us to make any fundamental changes to the current OTC Link network model or the trading process for our broker-dealer subscribers,” said Michael Modeski, President of OTC Link. “We are pleased to report that the OTC Link trading system will continue to provide fully attributable quote and message services to our network of subscribers. The current trade reporting process will not change, and we will not automatically execute orders or act as a matching engine.”
“OTC Markets Group’s mission is to operate open, transparent and connected marketplaces that link broker-dealers and provide investors with the information they need to intelligently trade any OTC security at the best possible price,” said R. Cromwell Coulson, President and Chief Executive Officer of OTC Markets Group. “OTC Link’s FINRA membership will allow our interdealer quotation and messaging system to continue that mission, serving our broker-dealer subscribers as a regulated entity without altering their user experience.”
OTC Markets Group will announce its status as an ATS upon completion of the SEC’s formal ATS registration process.
About OTC Markets Group Inc.
OTC Markets Group Inc. (OTCQX: OTCM) operates the world’s largest Open, Transparent and Connected marketplace platform, delivering price transparency in over 10,000 OTC securities. Our OTC Link trading system directly links broker-dealers that provide liquidity and execution services. We organize the wide spectrum of OTC-traded securities into three marketplaces to inform investors of opportunities and risks – OTCQX® - The Intelligent Marketplace for the Best OTC Companies; OTCQB® - The Venture Marketplace; and OTC Pink® - The Open Marketplace. Our information-driven platform provides the information to intelligently trade through any broker at the best possible price, and empowers companies to build the best markets for their investors. To learn more about our Open, Transparent and Connected marketplaces, visit www.otcmarkets.com.
How easily would it be for OTC Link LLC to trade on non-public information, and/or negatively influence the public perception of a stock that they are quoting, and/or are targeting to profit from as the PPS collapses? This would explain some of the OTCmarkets.com updates that are "revealed" prior to them being posted for public view.
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