On 13 September, FINRA fined JPMorgan $1.1mn for trade order system.
- J.P. Morgan Securities LLC fined in relation to order management systems (OMS).
Alleged Violations
- Followed creation of separate OMS for cash institutional clients, and retail clients.
- Did not account for filter in old OMS causing over-advertisement of trade volume.
- Erroneously captured volume already advertised on trade date, when later swept
for volume delayed for advertising, per client preference on trade date plus three. - The firm’s old system also did not filter out replicated parent-child order volume.
- Thus, institutional client trade advertised on trade date, was submitted again for
advertisement, and for some parent-child orders, more than once, on T+3 basis. - Higher impact as institutional clients moved to new OMS over four-month period.
- Overstated advertised trade volume by billions of shares, using Bloomberg, AutEx.
- Person who reviewed did not have access to firmwide volume due to info barriers.
- Firmwide execution volume was not readily accessible to individuals doing reviews.
- Limited ability to know volume for any security to ensure accurate advertisement.
- Lacked supervisory system to review accuracy of volume advertised on T+3 basis.
Sanctions
- Required to revise procedures, provide report on implementation and performance.
