NYSE Euronext paid a $5 million fine Friday, Sept. 14 to settle an action brought by US regulator the Securities and Exchange Commission, which alleged that NYSE provided participants with an improper headstart on certain trading information because two of its proprietary feeds distributed data earlier than the same data was contributed publicly to the Consolidated Tape for a period between 2008 and 2010.
The two feeds affected are OpenBook Ultra, which distributes NYSE's full order book in real time, and PDP Quotes, which contains quotes for each security. The disparities were caused by NYSE's internal architecture, which contained a shorter path for one feed than the path used to contribute data to the CTA, and a software issue that caused delays in the system that contributes data to the CTA.
Regulation NMS (National Market System), the set of SEC rules pertinent to the action, prohibits distribution of market data to customers before it is included in the Consolidated Tape Association feeds, which distribute data of trades and quotes to the public. According to NYSE Euronext officials, the time differences were, in most cases, measurable in milliseconds -- though this sometimes extended to seconds -- and were resolved through technology changes implemented in 2010 and 2011.
The SEC also said that NYSE had inadequate compliance functions in place. As part of the settlement, NYSE has also agreed to retain an independent consultant to evaluate its Reg. NMS compliance processes and to implement the consultant's recommendations.
"We will continue to take every responsible measure to ensure that our market operates with the utmost fairness and transparency," said NYSE Euronext chief executive Duncan Niederauer in a statement.
Anthony and James delve into how the systematic internalizer regime is shaping up, and then examine the regtech sector.Subscribe to Weekly Wrap emails