The Securities and
Exchange Commission is usually busy busting insider traders and penny stock
operators. But Thursday the regulator charged the New York Stock Exchange and
two affiliated exchanges for “failure to comply with the responsibilities” of
following securities laws.
The
NYSE and the affiliated exchanges including Archipelago, where many
exchange-traded funds are traded, agreed to a $4.5 million penalty. NYSE
spokesman Eric Ryan declined to comment. The NYSE didn’t admit or deny the
charges.
The
SEC says between 2008 and 2012 the NYSE exchanges “repeatedly engaged in
business practices that either violated exchange rules or required a rule when
the exchanges had none in effect.”
As an
example, the NYSE exchanges used an “error account” at Archipelago to “trade
out” of securities even though there were no rules that allowed such a
practice.
In a
more charged example, the SEC focused on how the NYSE provided “co-location”
services to customers, which gives traders an edge in trading speed by allowing
them to place their computers closer to the data center. But the services were
provided on “disparate contractual terms without an exchange rule in effect
that permitted and governed the provision of such services on a fair and
equitable basis,” the SEC says.
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