United States: Company pays fees for violation of market access rules
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A broker has paid a fee for failing to establish reasonable risk management protocols and monitoring efforts regarding exchange-traded product (“ETP”) order flow.
In separate acceptance, waiver and consent letters, the exchanges found that the company had not established or maintained any risk management protocol or monitoring procedures that would prevent the acceptance of trades above the maximum price. or the size parameters set by the Exchange Act.
As a result of these findings, exchanges determined that the company violated (i) SEA Rule 15c3-5(b), which requires brokers with market access to establish reasonable risk management protocols, (ii) SEA Rule 15c3-5 (c)(1)(ii), which requires firms to establish written monitoring and risk management procedures designed to prevent incorrect orders, and (iii) various exchange rules requiring firms to monitor compliance.
To settle the charges, the company accepted (i) a censure, (ii) a fine of $225,000 and (iii) an undertaking guaranteeing that the company will revise its risk management and monitoring processes to comply with the exchange rules and industry standards.
The action was brought by FINRA on behalf of NYSE, NYSE Arca, Inc., Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., The Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq GEMX, Inc., Nasdaq ISE, LLC, Nasdaq MRX, LLC, The Nasdaq Options Market LLC and Nasdaq PHLX LLC.
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