FINRA

FINRA, the Financial Industry Regulatory Authority, is the self-regulatory organization that writes and enforces rules for US broker-dealers, under the oversight of the SEC. It was formed in 2007 from the merger of the NASD and the member regulation arm of the New York Stock Exchange.

How it works

FINRA is not a government agency, but every brokerage that deals with the public must be a member. Its main jobs:

• Licensing and conduct. It administers qualification exams such as the Series 7, examines member firms, and fines or bars brokers. Its BrokerCheck tool lists the history of firms and registered representatives.
• Market surveillance. It monitors trading for manipulation and insider trading and refers cases to the SEC.
• Trade reporting. Off-exchange trades, including those executed by wholesalers and in dark pools, are reported through FINRA facilities.
• Data. FINRA collects short interest from brokers twice a month and publishes daily short sale volume files for off-exchange trades.

Why it matters for traders

Much of the data retail traders use to gauge short positioning comes from FINRA. The daily short volume files are often confused with short interest. Short volume counts trades marked short that day, which includes routine market maker hedging, while short interest is the outstanding open short position as of a settlement date. A stock with 55% short volume is not necessarily heavily shorted.

FINRA also publishes weekly volume statistics for alternative trading systems on a delay, which shows how much of a stock trades in dark pools.

FAQ

Is FINRA part of the government?

No. FINRA is a private, nonprofit self-regulatory organization. The SEC approves its rules and can review its disciplinary decisions.

How often does FINRA publish short interest?

Twice a month, based on positions as of mid-month and end-of-month settlement dates, with publication several business days later.