Large Clearing Firm Fined $1.8 Million for Inadequate OATS Reporting
FINRA fined a large clearing broker $1.8 Million for systemic reporting deficiencies in its Order Audit Trail System (OATS) reporting. Most of the misconduct related to the firm’s Alternative Trading System (aka dark pool). FINRA also charged the firm with inadequate systems and controls relating to the reporting. Thomas Gira, Executive Vice President of FINRA Market Regulation, said, “OATS data is integral to FINRA’s automated market surveillance program to detect manipulative activity and other potential violations of FINRA rules and federal securities laws. It is critical that firms have the necessary systems and supervision in place to ensure compliance with their OATS and trade reporting obligations.”
OUR TAKE: FINRA has imposed a fairly significant fine for OATS reporting, a technical area requiring a significant amount of expertise. This continues the regulators’ review of dark pools and technical compliance.