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The record fine recently slapped on two U.S. stock exchanges was the result of a history of failing to meet regulators’ demands, according to people familiar with the matter.
In January, the Securities and Exchange Commission revealed an unprecedented $14 million penalty against two markets formerly owned by Direct Edge Holdings LLC. The sanction was so large, according to two people familiar with the matter, because Direct Edge failed for years to meet agency requests to seek approval for a set of trading instructions known as order types and also broke the terms of a 2011 settlement with the regulator.
Bats Global Markets Inc. bought Direct Edge a year ago and in July addressed the order type issue by releasing a 114-page summary of how they worked at Direct Edge. But that was about three years after the SEC first identified the matter and demanded a public filing, something that was never published under Direct Edge’s watch, people familiar with the matter said. The exchanges also were found to have broken rules they were told to uphold in the earlier case, according to last month’s settlement. While the complaint was filed in January, what motivated regulators to impose the penalty wasn’t previously clear.
Source: Bloomberg Business
