The New York Stock Exchange and two affiliated exchanges agreed to pay $4.5 million and re-evaluate their business practices to settle an enforcement action brought by the Securities and Exchange Commission, the agency announced Thursday.
Parent company NYSE Euronext, which neither admitted nor denied the charges, will pay the penalties levied against New York Stock Exchange, NYSE Arca and NYSE MKT for failing to have or follow certain exchange rules. NYSE MKT was formerly known as NYSE Amex and Archipelago Securities. NYSE Euronext, a wholly owned subsidiary of IntercontinentalExchange, has four months to review its compliance program and hire an independent consultant, who must report back to the SEC six months after being hired.
NYSE Euronext officials declined to comment on the complaint, which involved alleged violations from 2008 through 2012 regarding several exchange practices, including the use of an error account at Archipelago, co-location services provided to customers on disparate terms, a now-closed block-trading facility, an early feed of closing orders to floor brokers and improper execution of locked market orders. According to the SEC, those practices either violated the exchange's own rules or were conducted without proper rules in place.
“This was an overriding failure by the exchange to have rules in place,” Andrew Ceresney, SEC enforcement director, said on a press briefing call. The violations “were a result of a lack of sufficient attention.”
The SEC has brought three previous enforcement actions against NYSE, including in 2012 for discriminatory distribution of market data information. Mr. Ceresney noted the current settlement is the latest in a line of actions taken against other exchanges in recent years. “All are part of the commission's broader focus on market structure,” said Mr. Ceresney.
