Firm Settles Options Exchange Charges for Continuous-Quoting Lapses

An options market maker settled Nasdaq Texas ("NTX") claims that it failed to meet continuous two-sided quoting requirements and failed to supervise that obligation.

According to an NTX AWC, the firm acted as a market maker and a lead market maker required to provide two-sided quotes for a set share of the time its assigned options series are open. NTX said its rules require a threshold is 60 percent for market makers and 90 percent for lead market makers.

NTX found that during the relevant period, the firm fell short on 46 trade dates. NTX said the firm's lapses stemmed mainly from confusion over how the exchange measures quoting compliance.

The exchange also faulted the firm's supervision. It said the firm's monitoring tool tracked overall quoting in real time, but did not generate alerts or separate the firm's different quoting duties. NTX found the firm's written procedures also did not spell out the review steps for compliance staff.

The firm agreed to a censure and a $180,000 fine. The firm also agreed to certify that it had fixed the problems and changed its procedures.