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Wall Street to Get Graded on Spoofing

Finra plans to start rating stock brokers that have an excessive number of unfulfilled orders; bond traders may be next.

By Dave Michaels, Bloomberg | Updated on January 05, 2016

U.S. regulators have grown so concerned that traders are using high-speed computers to manipulate markets that they’re planning a new tactic to clamp down on the practice—rating brokers on how much spoofing flows through their order books.

The Financial Industry Regulatory Authority (Finra) said it plans to issue report cards this year that will grade firms on how many phony bids to buy or sell stock they might have a role in facilitating. Finra, a market cop funded by Wall Street, expects brokers to use the assessments to root out any misconduct, the regulator said Tuesday in its annual letter on exam priorities. The reports won’t be made public.

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