Broker-Dealer Settles Parallel NYSE Arca and Nasdaq Charges for Market Access Failures

A broker-dealer settled parallel charges brought by NYSE Arca, Inc. and Nasdaq Stock Market, LLC for failing to institute financial risk management controls when providing market access to affiliated organizations. A parallel settlement with FINRA for the same violations was previously made public (see related coverage).

In separate Letters of Acceptance, Wavier, and Consent, the exchanges found that the broker-dealer did not have sufficient supervisory protocols in place to prevent the entry of erroneous orders or for the review of broker-dealer's soft block system.

The exchanges both concluded that the broker-dealer violated Exchange Act Section 15(c)(3) ("Registration and regulation of brokers and dealers") and SEA Rule 15c3-5 ("Risk management controls for brokers or dealers with market access"). Additionally, NYSE Arca found that the broker-dealer violated NYSE Arca Rule 11.18(b) ("Supervision") and its predecessor NYSE Arca Equities Rule 6.18(b); Nasdaq found the broker-dealer to be in violation of Nasdaq Rules 2010A ("Standards of Commercial Honor and Principles of Trade") and 3010 ("Supervision").

To settle the charges, the broker-dealer agreed to a censure and a $250,000 fine - paid jointly to the NYSE Arca, Nasdaq and FINRA - of which NYSE Arca and Nasdaq each received $90,000.