JPMorgan Fined $30 Million by SFC for Dark Pool Failings

Inadequate implementation of dark pool venue systems and controls in breach of Hong Kong regulator’s rules.

JP Morgan
JP Morgan follows BNP Parbias and HSBC in incurring dark-pool related fines from the SFC.

Three of JPMorgan’s Hong Kong-based equities businesses have been fined a collective $30 million by the Securities and Futures Commission (SFC) for failing to properly implement its dark pool trading venue.

Alongside failure to implement adequate systems and controls for client facilitation and principal trading business, and short selling activities, JPMorgan Broking (Hong Kong), JPMorgan Securities (Asia Pacific) and JPMorgan Securities (Far East) were reprimanded and fined $15 million, $12 million, and $3 million, respectively, by the SFC for breaching regulations aorund its dark pool systems implementation.

The Hong Kong regulator found that following the authorization of JPMorgan's dark pool venue JPMX to begin activity as a pure agency-to-agency matching platform, "numerous principal orders of JPMorgan were incorrectly routed into the agency pool of JPMX for matching between March and July 2012 due to human and systems errors," with none of the orders crossed in JPMX.

JPMorgan is the latest firm to fall foul of wider regulations governing the activity of dark pool venues in Hong Kong, after BNP Paribas received a $15 million fine in August after failing to give priority to highly priced orders as had originally been claimed by the French bank.

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