Firm Settles Charges for Providing Improper "Market Looks"
Commentary by Glen Barrentine
A firm settled NYSE charges for allowing its floor brokers to provide non-customers with "market looks."
According to the AWC, the firm allowed its floor brokers to disclose "market looks"—"information about buying and selling interest in the market"—to third parties who were not reasonably believed to be involved in a securities transaction with the firm. NYSE found that one of the firm's brokers provided market looks to a third party in connection with an outside business activity for which the broker received compensation. NYSE also stated that two other brokers also provided market looks to the same third party, though they did not receive compensation.
NYSE also found that the firm's written supervisory procedures addressed the provision of market looks by handheld device, stating that floor personnel were permitted to send market looks messages from their handheld devices only to customers, but failed to address the provision of market looks by telephone.
NYSE determined that the firm violated NYSE (FINRA) Rules 3110(a) ("Supervisory System") and 3110(b) ("Written Procedures") as well as NYSE Rule 36 ("Communications Between Exchange and Members' Offices").
To settle the charges, the firm agreed to (i) a censure and (ii) pay a $25,000 fine.
Commentary
The AWC reminds NYSE Floor Brokers that NYSE Rule 36, as interpreted by NYSE Information Memo 14-2, limits the provision by floor brokers of "market looks" to third parties. For this purpose, the term "market look" means "information about buying and selling interest in the market." Specifically, as stated in NYSE Information Memo 14-2, market looks may only be provided to persons who are customers "provided that the customer is a person whom the Floor broker reasonably believes is receiving the order-related message in consideration of a securities transaction or potential securities transaction with a Floor broker."