Online trading major Interactive Brokers LLC has agreed to pay a $150,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From at least December 2017 through March 2022, for some clients, Interactive Brokers did not provide an aggregate display that contained all elements of the market data required by the Vendor Display Rule.
Specifically, the firm displayed incomplete market data through its desktop, online and mobile trading platforms to clients who did not pay the firm for real-time market data through a subscription service or by purchasing an on-demand “snapshot.”
For example, for these customers, the company displayed, on some trading platforms, the last sale price of a stock without also displaying the volume and market data for that particular sale or the stock’s NBBO.
In addition, the market data that the company displayed to these clients was delayed by 15 minutes and therefore did not reflect the NBBO’s prices, sizes and market data or aggregate last sale information for a stock as required by the Vendor Display Rule.
In March 2022, Interactive Brokers began providing all clients with a unified real-time display for NMS stocks that contains all required market data items at the point of order entry.
Interactive Brokers violated Rule 603(c) of Regulation NMS and FINRA Rule 2010 by failing to provide some of its clients with a consolidated display containing all required market data elements.
From at least December 2017 through December 2022, Interactive Brokers failed to establish, maintain and enforce a system of oversight, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the Vendor Display Rule.
The company did not have an oversight system or WSP from December 2017 to May 2021 and did not conduct any audits of order entry points for compliance with the Supplier Display Rule.
In June 2021, the firm implemented WSPs that required a review of order entry points on the firm’s trading platforms to determine whether the firm has provided clients with the required unified screens.
While Interactive Brokers conducted these assessments between June 2021 and December 2022, the firm did not examine all order entry points on the firm’s trading platforms. In the fourth quarter of 2022, the company identified 22 order entry points that it had not included in its previous assessments. The company began looking at all order entry points in its assessments in January 2023.
By failing to have an oversight system reasonably designed to achieve compliance with the Vendor Disclosure Rule, Interactive Brokers violated FINRA Rules 3110 and 2010.
In addition to the $150,000 fine, Interactive Brokers agreed to a censure.