Supporting the Approval of the FINRA Rule Change to Wash Sale Transactions

SIFMA provides comments to the Securities and Exchange Commission (SEC) supporting a proposed rule change by the Financial Industry Regulatory Authority (FINRA) relating to “wash sale” transactions and FINRA Rule 5210 (Publication of Transactions and Quotations), File No. SR–FINRA–2013–036.

As we noted in our initial comment letter on this filing dated October 4, 2013, SIFMA supports the goal of clarifying broker-dealers’ obligations for transactions that unintentionally result in no change in beneficial ownership and do not involve manipulative or fraudulent intent, what FINRA now defines as “self-trades.”

In an amendment since the original proposal was published, FINRA has tailored the proposal in way that would address its core concern while maximizing implementation and compliance efficiencies. In particular, the proposed rule change now draws an important distinction between intentional wash trades and unintentional “self-trades.” The proposed rule change also establishes an obligation on broker-dealers to take steps to avoid engaging in self-trades, which should prevent self-trades from causing market distortions. As a result, SIFMA believes the proposed rule change serves the interest of both regulators and market participants.