SEC grants extension for market access rule

Reuters

By Sarah N. Lynch

WASHINGTON (Reuters) - Broker-dealers won additional time from federal regulators to comply with new rules banning "naked access," where brokers rent their IDs to unlicensed high-speed traders.

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In a notice posted online on Monday, the Securities and Exchange Commission announced it would grant a limited compliance extension for certain provisions until November 30 from July 14 previously.

The move by the SEC comes after trade associations and exchanges had requested additional time.

The new rule was adopted in the months after the May 6, 2010, "flash crash" and aims to ban unfettered access to U.S. stock markets for unlicensed firms. Under the rule, certain brokers would also have to establish a system of risk management controls.

Exchanges and trade groups had said that brokers needed more time to prepare for two key provisions in the rule.

One involves implementing risk management controls to prevent orders from exceeding preset credit or capital thresholds. Such controls are not in place at many firms today.

The other provision has to do with risk controls for fixed income securities. Trade groups had asked for additional time because such pre-trade controls have not been used before in the fixed income market.

The groups had argued that complying with this provision would require a lot of time and effort, the SEC said.

Brokers will now get until the end of November to comply with these requirements. The rest of the rule will still begin on July 14.

The SEC said this extension is "reasonable to assure market participants have sufficient time to develop and implement the required risk management controls for activities where the application of these controls may not be widespread."

(Reporting by Sarah N. Lynch and Jonathan Spicer; Editing by Tim Dobbyn)