JP Morgan Securities LLC agreed to pay a fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Between September 2019 and May 2021, JPMS failed to take reasonable steps to demonstrate that the intermarket scan orders (ISOs) it routed met the requirements set forth in Rule 600(b)(31).
Specifically, the company experienced increased messaging activity, in part due to the company’s transition to a new exchange trading platform, which resulted in order routing delays. The delays have forced the firm, in some cases, to rely on outdated snapshots of hedged price market data that do not reflect the current market at the time the firm routed the orders to the trading centers.
As a result, the company routed a total of 6,682 orders that were priced through protected offers of other marketplaces.
Therefore, JPMS failed to take reasonable steps to demonstrate that the ISOs it routed met the requirements of Rule 600(b)(31) in violation of Rule 611(c). The company remedied this issue by May 2021 through updates to its technology infrastructure, including adding servers to handle the increased volume of messages and minimize processing delays.
Therefore, Respondent violated NMS Rule 611(c) and FINRA Rule 2010.
Between September 2019 and July 2021, JPMS’s supervisory system, including its written supervisory procedures (WSPs), was not reasonably designed to achieve compliance with Rule 611(c) of Regulation NMS.
JPMS’s oversight was unreasonable because, although JPMS checked for delay in order routing, the company had no process, including WSPs, to verify that the market data snapshots it relied on were accurate at the time the company routed the orders. ISO in trading centers. Therefore, the company failed to identify the processing delays that resulted in JPMS’s routing of the ISO violators in this matter.
In March 2021, JPMS implemented a new daily review designed to identify ISOs that were launched using potentially inaccurate market data, and in July 2021, JPMS updated its WSPs to reflect this review.
Therefore, Respondent violated FINRA Rules 3110(a), 3110(b), and 2010.
JP Morgan Securities agreed to a reprimand and fine of $18,090 (resolved concurrently with similar matters for a total fine of $100,000).