A proprietary trading firm settled NYSE American LLC ("NYSE American") charges for incorrectly marking sell orders.
In a Letter of Acceptance, Waiver and Consent, NYSE American found that the firm mismarked orders as long, while maintaining a short position, and vice versa, as a result of a flawed mechanism in a third-party order management system. Additionally, NYSE American determined that the firm did not create and maintain a reasonably designed supervisory system that would have ensured the firm was compliant with the relevant order-marking requirements. NYSE American concluded that the firm's supervisory system (i) failed to detect the mismarked orders, (ii) did not periodically verify its order-marking logic for accuracy and (iii) generated position verification reports that were irrelevant to the mismarkings, as the mismarkings took place intraday and the reports were generated at the start or end of the day.
As a result of its findings, NYSE American determined that the firm violated Regulation SHO Rule 200(g) ("Marking") and NYSE American Rules 7.16E ("Short Sales") and 3110(a) ("Supervisory System").
To settle the charges, the firm agreed to a censure and a $17,500 fine.
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