NYSE MKT LLC, a diversified financial marketplace, offers trading of equities, options, exchange traded funds, structured products, and holding company depositary receipts. The company also provides index calculation services for third parties; and international exchanges and the investment management community consulting services. In addition, it trades other market center stocks and exchange traded funds on an unlisted trading privileges basis. NYSE MKT LLC was formerly known as NYSE Amex LLC and changed its name to NYSE MKT LLC in May 2012. The company was founded in 1849 and is based in New York, New York. NYSE MKT LLC operates as a subsidiary of NYSE Group, Inc.
86 Trinity Place
New York, NY 10006
Founded in 1849
SEC Charges NYSE, NYSE Arca, and NYSE MKT for Repeated Failures to Operate in Accordance with Exchange Rules
May 1 14
The Securities and Exchange Commission announced an enforcement action against the New York Stock Exchange and two affiliated exchanges for their failure to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with Commission-approved exchange rules and the federal securities laws. Also charged was the NYSE exchanges’ affiliated routing broker Archipelago Securities. The NYSE exchanges agreed to settle the SEC’s charges by retaining an independent consultant and together with Archipelago Securities paying a $4.5 million penalty. As SROs, the NYSE exchanges are required to conduct their operations in accordance and compliance with their own rules as well as the federal securities laws. They are required to file all proposed rules and rule changes with the Commission, which publishes them for public comment, before they take effect. This transparency enables all participants trading on the exchanges to understand how their orders are processed and executed. According to the SECs order instituting settled administrative proceedings, the NYSE exchanges repeatedly engaged in business practices that either violated exchange rules or required a rule when the exchanges had none in effect. All of the NYSE exchanges used an error account maintained at Archipelago Securities to trade out of securities positions taken on as a result of their operations despite not having rules in effect that permitted them to maintain and use such an account. In another example, NYSE Arca failed to execute a certain type of limit order under specified market conditions despite having a rule in effect that stated that NYSE Arca would execute such orders. The violations detailed in the SEC’s order occurred during periods of time from 2008 to 2012. The SEC’s order finds that the NYSE exchanges violated Section 19(b) and 19(g) of the Securities Exchang e Act of 1934 through misconduct that included the following: NYSE, NYSE Arca, and NYSE MKT (formerly NYSE Amex) used an error account maintained at Archipelago Securities to assume and trade out of securities positions without a rule in effect that permitted such trading and in a manner inconsistent with their rules for the routing broker, which limited Archipelago Securities’ activity primarily to outbound and inbound routing of orders on behalf of those ex changes. NYSE provided co-location services to customers on disparate contractual terms without an exchange rule in effect that permitted and governed the provision of such services on a fair and equitable basis. NYSE operated a block trading facility (New York Block Exchange) that for a period of time did not function in accordance with the rules submitted by NYSE and approved by the SEC. NYSE distributed an automated feed of closing order imbalance information to its floor brokers at an earlier time than was specified in NYSE’s rules. NYSE Arca failed to execute Mid-Point Passive Liquidity Orders (MPLOs) in locked markets (where the bid and ask prices are the same) contrary to its exchange rule in effect at the time. In addition, the SEC’s order finds that NYSE Arca accepted MPLOs in sub-penny amounts for National Market System stocks trading at over $1.00 per share, in violation of Rule 612(a) of Regulation NMS. The SEC’s order further finds that Archipelago Securities failed to establish and maintain policies reasonably designed to prevent the misuse of material, nonpublic information in connection with error account trading. Archipelago Securities also violated and failed to give the SEC timely notice of its violation of the net capital rule – a critical federal securities law provision intended to ensure that brokers and dealers remain solvent and can meet their financial obligations. Now wholly-owned subsidiaries of Intercontinental Exchange Inc., NYSE, NYSE Arca, NYSE MKT, and Archipelago Securities have consented to the SEC’s order without admitting or denying the findings. They agreed to collectively pay the penalty of $4.5 million, and the NYSE exchanges agreed to complete significant undertakings including retaining an independent consultant to complete a comprehensive review of their policies and procedures for determining whether (1) a new business practice or a change to an existing business practice requires the filing with the SEC of a proposed rule or rule change, and (2) business practices requiring an exchange rule are conducted pursuant to and in accordance with an effective exchange rule.