Broker-Dealer Fined for Failing to Implement Erroneous Order Controls

A broker-dealer settled NYSE Arca charges for failing to apply erroneous order controls in connection with the execution of a customer order.

In a Letter of Acceptance, Waiver and Consent, NYSE Arca said that as a result of a coding error, the broker-dealer did not apply erroneous order controls to the market participant identifier through which the customer's order was routed. Had the broker-dealer implemented erroneous order controls, NYSE Arca said, the customer's order would not have entered the market. NYSE Arca also said the broker-dealer was aware of the error after the first instance, but failed to take steps to remediate the issue.

As a result, NYSE Arca determined that the broker-dealer violated Exchange Act Rule 15c3-5(b) and 15c3-5(c)(1)(ii) ("Risk management controls for brokers or dealers with market access"). To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a civil monetary penalty of $35,000.