Subject: File No. SR-FINRA-2011-051
From: suzanne h shatto

October 20, 2011

this looks like dark pool stuff to me. brokers sign up for dark pools that others own to trade unbeknownst to the general public. some brokers do dark pools to accommodate their customers from different offices, to accommodate large stock buyers and sellers. however, there are fewer transactions in ATS lately, probably because large stock buyers and sellers can break up their orders to any size. they can break them up and do.

"FINRA trade reporting rules require that over-the-counter (OTC) transactions in equity securities3 between members be reported to FINRA by the executing party.4
3 Specifically, these transactions are: (1) transactions in NMS stocks, as defined in SEC Rule 600(b) of Regulation NMS, effected otherwise than on an exchange, which are reported through the Alternative Display Facility or a Trade Reporting Facility and (2) transactions in OTC Equity Securities and Restricted Equity Securities, as those terms are defined in Rule 6420, which are reported through the OTC Reporting Facility. Executing party is defined as the member that receives an order for handling or execution or is presented an order against its quote, does not subsequently re-route the order, and executes the transaction."

yes, the executing party must be the american broker with a license to trade. if they have correspondent brokers or whatever, they remain in the position of executing party because those subordinate positions designate those customers as customers of the broker. there is no co-ownership of the executing broker.

examine why a broker would trade in a dark pool:
1) they don't want the public to know the size of orders, whether broken into smaller orders or not.
2) they don't want the public to know that they are buying to cover a failure to deliver. there may be more shares available to buy or sell in a dark pool.

well, both of these instances have features of price manipulation in denying the public information.
so i don't like the exemption given for these reasons.

i see that the dark pool is not guaranteeing a trade made in this environment. and both parties have to ratify the trade? no, i don't like this. a trade is either executed or not. no tentative negotiation between buyers and sellers. the public would not have that advantage, so other traders should also not have that advantage.

i have an idea.
outlaw trading environments that don't have transparency and public access.
this rule appears to enable manipulation in other markets and give a more favorable environment to this particular environment.
further, no outside parties should have access to any dark pool.