A broker-dealer settled NYSE and NYSE Arca (the "exchanges") charges for failing to maintain continuous, two-sided trading interest when acting as a Supplemental Liquidity Market Maker and Designated Market Maker.
In separate Letters of Acceptance, Waiver, and Consent, the exchanges stated that the broker-dealer inappropriately attributed quote gaps to (i) technological issues including data feed issues and connectivity outages and (ii) misleading information on the broker-dealer's market-maker registrations.
As a result, the exchanges determined that the broker-dealer violated NYSE Rules 107B(d)(1) ("Supplemental Liquidity Providers - Two-Sided Obligation") and 104(a)(1) ("Dealings and Responsibilities of DMMs") and NYSE Arca Rule 7.23-E ("Obligations of Market Makers").
In addition, NYSE found that the broker-dealer did not modify its trading strategies and parameters requiring floor-based intervention when it elected in May 2020 to fully operate electronically. NYSE stated that, in one instance, when the open-on-trade quoting strategy failed to engage, the broker-dealer could not manually provide liquidity in the re-opening auction or post-auction period, in violation of NYSE Rule 104(f) ("Functions of DMMs").
To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a $55,000 fine ($35,000 for NYSE Arca violations, and $20,000 for NYSE violations).
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.