FINRA Fines Virtu $175,000 Over Failure to Offer Best Execution

FINRA Fines Virtu for failure to provide the best execution to the orders it had received from its broker-dealer clients.

July 22 2020 | AtoZ Markets – The US Financial Industry Regulatory Authority (FINRA) has fined Virtu Americas LLC (f/k/a KCG Americas LLC) with $175,000 for its failure to offer the best execution to its customers.

FINRA fines Virtu for rule violation

FINRA decided to Virtu for violating its rule 5310 which dictates the offering of “the best market for the subject security”; rule 3110 under which the service providers need to make sure the businesses are compliant with the US securities law; and rule 2010 that “requires members to observe high standards of commercial honor and just and equitable principles of trade.” Notably, violation of any FINRA rule will automatically violate rule 2010.

Read also: FINRA Fines JP Morgan Securities $200K For Non-Compliance of KYC

Out of the total $175,000 fine, $100,000 was for the violation of rules 5310 and 2010. The other $75,000 is for breaking rule 3110 and 2010.

The rule violations occurred during the period of September 1, 2015, through August 21, 2017.  During this time, the firm executed 13,136 customer orders received from two of its broker-dealer clients. Specifically, on September 1, 2015, Virtu accepted orders for execution outside of normal trading hours, as early as 4:00 a.m. Normal trading hours are from 9:30 a.m. until 4:00 p.m. ET.

At the request of two of its broker-dealer clients, the firm accepted orders that were routed earlier than 8:00 a.m. and 8:15 a.m. respectively. However, they delayed the release of these orders for execution until 8:00 a.m. and 8:15 a.m. respectively (“hold and release” orders).

The company failed “to use reasonable diligence to ascertain the best market for the subject securities and by failing to buy or sell in such market so that the resultant prices to the customers were as favorable as possible under prevailing market conditions” and also “failed to establish and maintain a supervisory system reasonably designed to achieve compliance.”

Virtu Americas agrees to pay FINRA’s fine

In its response to FINRA, Virtu did not admit or deny the allegations but accepted the fine for a settlement. On top of the fine, Virtu agrees to a censure.

“Virtu hereby accepts and consents, without admitting or denying the findings, and solely for the purposes of this proceeding and any other proceeding brought by or on behalf of FINRA, or to which FINRA is a party, prior to a hearing and without an adjudication of any issue of law or fact,” Virtu noted.

FINRA also highlights that since its establishment in 2009, it has no history of disciplinary actions by the Securities and Exchange Commission (SEC) or any other securities regulators.

Think we missed something? Let us know in the comment section below.

Share Your Opinion, Write a Comment