SEC ALLOWS ELECTRONIC CONFIRMS FOR POST-TRADE MESSAGING SYSTEM
The staff of the SEC’s Division of Trading and Markets granted No-Action Relief to a technology firm’s post-trade automation system to allow the delivery of electronic trade confirmations to satisfy Rule 10b-10. The system allows the exchange of post-trade settlement notifications among institutional customers. All transactions, including clearance and settlement, occur outside the system. The system includes DK messaging facilities and electronic storage. The applicant noted that the system had sufficient capacity, disaster recovery, and information security.
OUR TAKE: Although this No-Action Relief is conditioned on the use of the system by institutional customers, it is only a matter of time before electronic confirms and messages become the standard in the brokerage community as new technologies develop. For technology providers, proving the integrity of the system, including capacity, reliability, and security, will be key factors to comforting the regulators and clients.