Nasdaq Fines SpeedRoute $450,000 for Market Access and Supervision Violations

·3 min read

NEW YORK, Jan. 18, 2022 (GLOBE NEWSWIRE) -- The Nasdaq Stock Market, LLC (“Nasdaq”) today announced that it censured SpeedRoute LLC (“SpeedRoute”) and fined the firm $450,000 for violating various provisions of Rule 15c3-5 of the Securities Exchange Act of 1934 (known as the Market Access Rule) over a nearly five-year period, from January 2017 through November 2021. As a result of these violations, the Firm failed to prevent the transmission of numerous erroneous orders, resulting in the filing of 30 clearly erroneous execution petitions.

SpeedRoute provides broker-dealer clients access to trading on Nasdaq and other exchanges. During the relevant time period, while executing millions of trades totaling billions of shares on Nasdaq alone, SpeedRoute failed to establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to prevent the entry of erroneous orders from clients and to prevent the entry of orders that exceed appropriate pre-set credit thresholds for clients. In addition, SpeedRoute failed to establish a system for regularly reviewing its risk management controls and for conducting the annual review and certification required by the Market Access Rule.

Among other issues, during part of the review period, the Firm failed to apply certain of its erroneous order controls and all of its credit limit controls to any of its clients. This was caused, in part, by an erroneous system setting and an error in market data integration, both of which resulted in the operational failure of those controls. While SpeedRoute learned that these controls were not functional in the fourth quarter of 2018, and before it fully resolved the underlying issue over a year later, the firm continued to send orders to Nasdaq during which time SpeedRoute failed to establish additional controls or safeguards to control the risks involved, or to alert Nasdaq.

“As a gatekeeper providing access to our market for its clients, SpeedRoute plays a critical role in protecting investors and market integrity,” said John Zecca, Chief Legal & Regulatory Officer of Nasdaq. “In this case, SpeedRoute failed in its obligations for an extended period of time and as a result we are holding the firm accountable.”

In settling this matter, SpeedRoute neither admitted nor denied the charges, but consented to the entry of Nasdaq’s findings and the sanctions.

About the Nasdaq Investigations and Enforcement Department

The Nasdaq Stock Market, LLC (“Nasdaq”) is a self-regulatory organization required by the Securities Exchange Act of 1934 to enforce its broker-dealer members’ compliance with federal securities laws and rules as well as its own rules. In 2019, the U.S. Securities and Exchange Commission approved Nasdaq’s request for Nasdaq’s Investigations and Enforcement Department to assume responsibility for certain investigative and enforcement functions for trading activity on Nasdaq’s equities and options markets. This work had previously been performed on Nasdaq’s behalf by the Financial Industry Regulatory Authority, Inc., or FINRA. The SEC’s approval expanded Nasdaq’s regulatory responsibilities, which previously included investigative and enforcement work for Nasdaq’s affiliated exchanges, options and equity surveillance, membership qualification, and qualifying companies for initial and continued listing.

About Nasdaq

Nasdaq (Nasdaq: NDAQ) is a global technology company serving the capital markets and other industries. Our diverse offering of data, analytics, software and services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions and career opportunities, visit us on LinkedIn, on Twitter @Nasdaq, or at www.nasdaq.com.

Nasdaq Media Relations Contact:

Will Briganti
+1.646.964.8169
william.briganti@nasdaq.com

NDAQG


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