In separate Letters of Acceptance, Waiver and Consent, the Exchanges found that the firm did not manually record the correct order receipt and entry times for thousands of options orders that were routed to each Exchange. The Exchanges also found that the firm's written supervisory procedures ("WSPs") did not adequately address recordkeeping requirements mandating the accurate recording of the order receipt and entry times of options orders. Additionally, the Exchanges found that, while the firm's WSPs contained a procedure mandating the daily review of a report alerting the firm to any orders with earlier execution times than order entry times, the firm's WSPs did not contain procedures for reviewing order entry times or order receipt times.
As a result of these findings, NYSE Arca determined that the firm violated SEA Rule 17a-3 ("Records to Be Made by Certain Exchange Members, Brokers and Dealers") and NYSE Arca Rules 6.68-O ("Record of Orders") and 11.18 ("Supervision"), and NYSE American determined that the firm violated SEA Rule 17a-3 and NYSE American Rules 956NY ("Record of Orders") and 320 ("Offices – Approval, Supervision and Control").
To settle the charges, the firm agreed to (i) a censure, (ii) an undertaking to modify its WSPs and (iii) a $480,000 total fine, $115,000 of which will go to each of the Exchanges, with the rest to be divided between Nasdaq Phlx LLC and Cboe Exchange, Inc.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.