FINRA fines Trillium for phony quotes

September 14th, 2010

High-frequency trading is one of our favorite subjects over on FierceFinanceIT, and we encourage you to tune in for our take on the subject. The issue has really heated up recently as the regulatory response to the May 6 Flash Crash is expected this month.

What we got today was quite interesting: The Financial Industry Regulatory Authority (FINRA news) announced it has fined Trillium Brokerage Services and 11 of its employees for various violations linked to its high-frequency trading operations for the three-month period at the end of 2006 and the start of 2007–a period that interestingly enough does not include the infamous Flash Crash.

FINRA and the SEC have been conducting sweeps of brokerages as part of their probe of the event, and this may have fallen out of that.

FINRA accused the firm and its traders of lodging fake buy and order prices that were advantageous for Trillium. Once their own orders were filled, they withdrew the fake orders. They did this 46,000 times, reaping $525,000 in profits, which they were asked to give back.

The issue here is whether this sort of activity was widespread. So-called “quote stuffing” in various versions may be much more widespread, and some may conclude that other settlements of this sort are coming. Certainly, this is a PR event for the high-frequency trading industry, which has been on the defensive as of late.

For more:- here’s an article in Fortune




About Value News Network

Value is the only commonality in an increasingly complex, challenging and interdependent world.
Laurance Allen: Editor + Publisher