Floor Broker Sets NYSE Arca Fees for Disadvantageous Options Market Makers Finance & Banking

United States: Floor broker settles NYSE Arca fees for disadvantageous options market makers

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A broker installed NYSE Arca, Inc. (“NYSE Arca”) charges for “failure to properly advertise a customer order” and related supervisory failures. NYSE Arca alleged that the broker-dealer allowed his client to hedge an option in the cash market before telling the crowd of traders on the floor of the option order.

In an acceptance, waiver and consent letter, NYSE Arca found that on January 26, 2021, the company’s telephone attendant informed a client that his option trade had been announced, although the size and the price of the option order were not announced to the trading crowd. . The client passed this information to the option counterparty, who was then able to cover the option before the order was passed on to the crowd of traders on the exchange floor. As a result, the crowd of traders did not have the opportunity to participate in options trading on the same terms as the counterparty.

NYSE Arca found that the firm’s monitoring system was not reasonably designed to ensure that its clients would not be notified of an order announcement until after all material terms of the order had been transmitted. to the crowd of traders.

As a result, NYSE Arca found that the company allegedly violated NYSE Arca rules. 11.1(b) (“Compliance with Law and Good Business Practices”) and 11.18(b) (“Monitoring”).

To settle the charges, the broker accepted (i) a censure and (ii) a fine of $20,000.

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