SEC Fines New York Stock Exchange $4.5 Million For Failure To Comply With ...

A new month, and new trouble for one of the major stock market exchanges. The April buzz from the release of Michael Lewis' 'Flashboys,' which charged that the markets are rigged, has just begun to die down but the New York Stock Exchange already has new trouble on its hands : it's being fined $4.5 million by the Securities and Exchange Commission (SEC) for a failure to comply with its own exchange rules.

The SEC has charged the New York Stock Exchange, NYSE Arca and NYSE MKT with a failure to comply with their own exchange rules, the SEC announced Thursday. The NYSE's affiliated routing broker, Archipelago Securities, was also named in the SEC's order. And without confirming or denying the charges, the NYSE and Archipelago have agreed to pay a $4.5 million fine to settle the SEC's claims.

According to the SEC's charges, the NYSE and its affiliated its exchanges 'repeatedly engaged in business practices that either violated exchange rules or required a rule when the exchanges had none in effect.' Violations occurred between 2008 and 2012, the SEC said, and include misconduct like: using an error account at Archipelago to assume and trade out of securities positions without a rule that permitted such transactions; the provision of co-location services to customers on disparate contractual terms without an exchange rule in place; the operation of a block trading platform (New York Block Exchange, launched in 2009 with the goal of maximizing liquidity access and improving the execution of block trades, the NYSE said at the time) that did not comply with NYSE/SEC rules for a period of time; and the distribution of an automated feed of closing order imbalance information to NYSE floor brokers at an earlier time than was specified in NYSE's rules.

The SEC also charged the NYSE Arca with failing to execute mid-point passive liquidity orders (MPLO's) in markets where bid and ask prices are the same, a violation of the exchange rules in effect at the time, as well as accepting MPLO's in sub-penny amounts for stocks trading above $1.00 per share, a violation of the SEC's own minimum pricing requirement rules.

'The order highlights instances where the exchanges conducted business without a rule in place due to weak or inadequate policies and procedures,' Antonia Chion, an associate director in the SEC's Division of Enforcement, said in a statement Thursday. 'In other instances, the exchanges did not operate in compliance with their effective rules. Both failures reflect a troubling lack of compliance with the requirements and obligations imposed on securities exchanges.'

The NYSE and its affiliates are wholly-owned subsidiaries of IntercontinentalExchange IntercontinentalExchange , and together with Archipelago have agreed to collectively pay the $4.5 million penalty but are doing so without admitting or denying the veracity of the SEC's findings. They have also agreed to find an independent consultant that will conduct a review of their policies and procedures.

This is not the first time the NYSE has been charged by the SEC; in September 2012, the SEC charged the exchange with providing certain customers with a head start on trading information. The NYSE and its then-parent company NYSE Euronext agreed to pay a $5 million fine, the first-ever SEC financial penalty levied against an exchange.

Lokasi:

Share :