Reg NMS Compliance Testing Approaches

Writing by Ganesh on Tuesday, 17 of February, 2009 at 11:44 am

The new Regulation National Market System (Reg NMS) has brought in major changes in the structure of the equities markets in the USA. As the original NMS framework dates back almost three decades, it is obvious that the old framework cannot fit into the intricate trading systems of the present era. The present modernized and strengthened structure has brought in four major rules, The Order Protection Rule, The Access Rule, The Sub-Penny Rule, and The Market Data Rule, which necessitate the organizations to place quality at the forefront of the implementation. To achieve the desired quality, organizations must adopt a meticulous and rigorous testing approach across the program, and this in return will provide two significant benefits:

  • Compliance with the new regulations for Reg NMS
  • An application/infrastructure that is robust.

IT spending on Reg NMS compliance technology is estimated to be more than a hundred million USD ($100mn). This has clearly revealed the significant impact the new regulations are having on the trading companies. However, as with most initiatives driven by compliance, it requires organizations to invest wisely – both financially and in time – to implement a quality system that will provide additional business benefits. In making these significant changes, it is imperative that the organization places quality at the forefront of the implementation.

AppLabs believes that quality products are the key factor to assess the level of readiness in terms of compliance criteria and achieving the substantial business benefits of a robust system. Organizations should be very careful when implementing the new trading system; by understanding the detailed requirements of Reg NMS one will be able to formulate a comprehensive testing approach to meet the required business objectives.

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Category: Reg NMS