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NYSE Regulation to Launch Ask Market Surveillance

Member firms and their compliance staffs will soon be able to search an online database for interpretive guidance on NYSE trading rules and submit questions to the NYSE's market surveillance staff.

Within the next few days, NYSE Regulation will launch Ask Market Surveillance, a software-based legal research tool for helping floor members and their legal and compliance officers search and answer questions about NYSE trading rules.

"We are putting in one place all of the types of information that are really relevant to [floor members and floor member organizations] who have questions about trading on our floor," says Nancy Reich, VP market surveillance at NYSE Regulation, the independent regulatory arm of the New York Stock Exchange. According to the NYSE Market Surveillance Division's Member Education Bulletin, dated Jan. 30, 2006, the new software system is due to be released in mid-February. Currently, the NYSE is at the end of a pilot that began in late November with a few members to make sure everything was working correctly. It expects to go live within the next few days or week, says Reich.

The tool is particularly relevant now in light of so much change going on with the NYSE's Hybrid Market as well as the changes being required by Regulation NMS, notes Reich. There is an expectation that with all the changes, member firms and compliance officers will have questions about Hybrid interpretation and Reg NMS, and so this tool is a way to increase communication between member firms and the market surveillance staff, Reich adds.

Ask Market Surveillance has two key attributes: It's a search tool for finding online interpretative guidance on NYSE trading rules, and it's also a querying tool for submitting queries to the NYSE's market surveillance staff, explains Reich.

Floor members and upstairs compliance staffs can use the tool to comb through online interpretive materials, including the NYSE's constitution and rules, information memos, member education bulletins, floor official manual, hearing panel decisions, as well as previously asked questions and answers.

While all of the information memos and education bulletins today are on the NYSE's Web site, people may not know where to look; but now these materials will be searchable in one place, suggests Reich.

In the past, "answers to questions of interest to members on the floor had not been published broadly," says Reich, but now those answers to questions will be part of a database, she continues.

According to Reich, the NYSE's Ask Market Surveillance database and query engine "provides a more user-friendly way to search these documents where there is likely to be some information relevant to the questions being asked."

In the spirit of Ask Jeeves—an Internet search and querying engine available to the public at large—Ask Market Surveillance encourages self-help on the part of the member firms. "We clearly want to do whatever we can to improve the culture of compliance among our members and their member organizations. This will help to do that," says Reich.

Alternatively, the tool enables member firms to direct a question to the market surveillance staff, which will be answered by a person who is considered an expert in that area. Then that answer will go back to the member or organization and be stripped out and stored in a database, says Reich. This lets everyone keep on top of the up-to-the-minute questions and answers, she says. Meanwhile, the regulator can make sure there is consistency in the answers that are being given out. If the staff is receiving a lot of questions on a particular topic, "it alerts us that maybe we need a more formal education bulletin," says Reich. Member firms will access the system via the NYSE's Internet-based EFP (electronic filing platform), which they already use today. But they will need to sign up for an account.

Brokers and specialists located on the floor will have direct access to the tool for either searching or querying. But the bulletin warns members that "because answers cannot be provided in real time, users should continue to bring time-sensitive questions directly to the Market Surveillance Division personnel in person on the floor or via telephone." Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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