uld use lower rs in not d as Z also g tax ers m April | May 2016 where applicable, incorporating into their quality control processes. These five suggested practices are: R EFER ENCES 1. See File No. SR-FINRA-2016-007. 1.

General Risk Assessment and Response:  Undertaking a “holistic review of [a firm’s] trading activity” and implementing crossdisciplinary committees to continually assess the risks associated with individual algorithmic strategies; 2. Software/Code Development and  Implementation: Implementing policies and processes that focus on the development, testing and implementation of algorithmic strategies, rather than just post-production reviews; 3. Software Testing and System Validation:  Developing and implementing policies and procedures around the actual testing of algorithmic strategies, including modification March 2016 to existing strategies; 4.

Trading Systems: Implementing policies  and procedures providing for the postimplementation review of an algorithmic strategy’s trading activity; and 5. Compliance: Ensuring effective  communication between compliance staff and algorithmic strategy development staff. 2.  ee Exchange Act Release No.

34-77551 (Apr. 7, 2016), 81 Fed. Reg.

21914 (Apr. 13, 2016) (the S “Adopting Release”). 3.  ee SEC Order relating to charges that Knight Capital Americas LLC violated Exchange Act rule 15c3-5 S (Exchange Act Release No.

70694 (Oct. 16, 2013)).See also Findings Regarding the Market Events of May 6, 2010, Report of the Staffs of the CFTC and SEC to the Joint Advisory Committee on Emerging Regulatory Issues at http://www.sec.gov/news/studies/2010/marketevents-report.pdf.See also Ben Rooney, Google Price Corrected After Trading Snafu, CNNMoney.com, Sept. 30, 2008, http://money. cnn.com/2008/09/30/news/companies/google_nasdaq/?postversion=2008093019. 4.

 ee Exchange Act Release No. 34-63241 (adopting Exchange Act rule 15c3-5 (the “Market Access S Rule”)); see also Exchange Act Release No. 34-73639 (adopting Regulation SCI). 5.

See, e.g., the CFTC’s recent Regulation AT proposal (80 Fed. Reg. 78824)(Dec.

17, 2015).  6.  he pre-requisite to registration as a Securities Trader is successfully passing the Series 57 (Securities T Trader) examination. 7.  ee Exchange Act Release No.

34-77175 (Feb. 18, 2016), 81 Fed. Reg.

9235 (Feb. 24, 2016) (the S “Proposing Release”). 8.  ee Proposing Release, 81 FR at 9237, “Individuals under the lead developer’s supervision would not S be required to register under the proposal if they are not primarily responsible for the development of the algorithmic trading strategy or are not responsible for the day-to-day supervision or direction of others on the team. ” 9.

Id. 10. See Adopting Release, 81 FR at 21915. 11. See Proposing Release, 81 FR at 9237. 12.

See Proposing Release, 81 FR at 9240. 13.  ee Proposing Release, 81 FR at 9237 (emphasis added). S 14.  or instance, the Proposing Release notes that “even if an algorithm never malfunctions from F New NASD rule 1032(f) can also be useful to legal and compliance personnel as a construct working in finance – means that a number for supervisory authority and responsibility. of septuagenarian and evenfocus on Given the SEC examination octogenarian hedge fund managers are still going strong. quantitative funds, systematic managers should The number of nonagenarian and centenarian use this FINRA guidance as an opportunity money managers seemstheir business and to evaluate and update sure to grow. Studies including some from the Brookings compliance processes. Institute show higher income groups in the US are extending their lifespans every year. EFFECTIVE DATE At the other announce the effective date of the FINRA must end of the age spectrum, many successfulrule change in a Regulatory Notice proposed hedge fund managers could afford to retire almost any time and some choose to published no later than 60 days from 7 April do so in their 40s, making it a more urgent 2016, and the effective date will be no sooner matter.

THFJ following publication of the than 180 days Regulatory Notice but no later than 300 days following SEC approval. THFJ or ce rgy, le 3 a technological standpoint, its behavior nonetheless may violate securities laws if appropriate constraints were not built into the design and development phases that ensure any order generated by the algorithm observes applicable regulatory standards…”. 15.  ee, e.g., the CFTC’s broad survey of U.S.

and non-U.S. industry best practices and regulatory S requirements in the Regulation AT proposing release (80 FR at 78834). .