Trading & Markets Counseling

Murphy & McGonigle's Trading and Markets Counseling practice represents exchanges and other market participants in seeking regulatory approval for complex proposals and in otherwise advising as to execution and clearing regulatory structures in the U.S. equities and options markets. Our practice is distinguished by the sophistication of the projects our clients entrust to us and the rare blend of legal, regulatory and market expertise our attorneys bring to those projects. In particular, we advise exchanges, markets, trading firms, private funds, clearing firms, clearing agencies and their related entities, guiding them through the transformational change that globalization, technology, competition and regulation have brought to the entire market structure. Our attorneys draw on a depth of knowledge and expertise that has been shaped not only by decades of advising clients as outside counsel on trading-related issues, but also by service as senior market regulators and policy makers at the Securities and Exchange Commission, and substantial time spent in and around the securities markets. In their former lives, our attorneys have played leadership roles at some of the most innovative trading-related firms of the last decade. Our partners include a former proprietary trader and equity analyst, the former general counsel of an institutional broker operating a leading Alternative Trading System (Instinet), and the former President of an exchange-affiliated institutional broker-dealer (Archipelago's Wave Securities).

Our core areas of expertise include: complex equity or options market structure issues; short sale regulation; broker-dealer financial responsibility; securities credit regulation; securities lending; underwriting and securities analyst issues; issuer repurchases; transfer agents; Dodd-Frank Act provisions relating to securities-based swap dealers; broker-dealer liquidations; new trading programs and products and related requests for exemptions and no action relief; and the SRO rule filing process.

Looking Forward

In 2019, the SEC’s Division of Trading and Markets (T&M) continued to tackle thorny issues, such as market data reform, the transaction fees pilot, market quality for thinly-traded stocks, Regulation Best Interest, CAT implementation, and exchange applications to list cryptocurrency-related ETFs. FINRA and other SROs continued to focus on algorithmic trading, code development, and market access controls. T&M issued a surprising and welcome no-action letter that takes a “sandbox” approach to facilitating competition in the clearing agency space and incorporating blockchain technology.

We expect more of the same in 2020. Cybersecurity, FinTech issues, market access, and manipulation (such as “layering”) will continue to receive a good deal of attention and will likely continue to be key issues covered during regulatory examinations. We expect continued SEC and FINRA focus on conflicts of interest and expect further clarification on Regulation BI. We expect that more requests for regulatory “sandbox” pilots will be submitted to T&M and that the Commission will take action on proposed major amendments to Rule 15c2-11 that governs OTC market making.

Finally, we believe the SEC will continue to focus on SRO governance, fees, and risk management. As exchanges expand in the U.S. equities space (e.g., the Long Term Stock Exchange and the prospective Members Exchange or MEMX), and seek to incorporate novel technology in exchange operations (as in the proposed Boston Security Token Exchange), we expect that the resulting liquidity diffusion and operational issues will continue to draw the attention of legislators, regulators, and pundits alike. Volatility will continue to be a key factor in 2020, as will the reaction of global markets as various geopolitical issues play-out, including major trade issues and the U.S. presidential election. In addition to good theater, as the U.S. contest continues to gain speed it will likely feed additional market uncertainty which typically drives volatility.