The NYSE today announced plans to discipline five specialist firms for trading ahead of clients and coming between orders that could have crossed without specialist intervention, a practice known as interpositioning. The action comes after the exchange reviewed trades over a three-year period ended Dec. 31. At a news conference today, Catherine Kinney, NYSE president and co-COO, said about 2 billion trades were being investigated, equal to about one day's exchange volume.
NYSE officials did not name the five firms but said in a press release they planned to seek "substantial" fines. David Doherty, NYSE executive vice president of enforcement, would not elaborate on the fines and also said he was not sure when the investigation would be completed. "We are certainly going to have to take a hard look at individuals," he said at the news conference.