ACS Execution Services LLC, an execution services provider for broker-dealers based in New Jersey, has recently entered a settlement with the US regulator, the Financial Industry Regulatory Authority, or FINRA. The settlement in question is in regards to rule violations that had appeared during the Review Period. In this case, this period is between the 9th of March, 2016, and the 9th of February 2018.
Foregoing Recording By The Millisecond
FINRA explained that each mandated record of an event must be entered within the Order Audit Trail System or OATS. This record must be expressed in terms of hours, minutes, and even seconds. Should a firm be capable of doing so, the time of the event must be recorded in all the aforementioned formats, with milliseconds included. During the Review Period, the systems of ACS were capable of capturing data by the millisecond in case of an order event.
Within this Review Period, ACS submitted about 343,503,736 New Order Reports, or NWs, to OATS. This accounted for about 37% of the firm’s total obligation of reporting. However, ACS made an error in its reporting format. Instead of recording them by their millisecond, all the NWs being sent to OATS had the millisecond value of “000”, instead of the actual data that the firm’s system recorded. As such, they failed on their determined obligation to record things by the millisecond whenever possible.
Further Violations
Through forgoing this condition, ACS had violated two FINRA Rules: Rule 7450(a) and Rule 2010.
Furthermore, ACS had failed on yet another front as well. Within the Review Period, the firm had failed to both establish and subsequently maintain a supervisory system when it comes to each associated person’s activities. These included Written Supervisory Procedures, or WSPs, all of which were further mandated to comply with the applicable rules that FINRA provides.
Of particular note, in this case, one of those rules is in regard to the accuracy of the timestamps order events being reported to OATS. This includes, but isn’t limited to, Unmatched Inter-Firm Route Reports, as well as Unmatched Exchange Route Reports.
Censure and $75,000 Fine
To add insult to injury, ACS was mandated to hold a review of its OATS reporting, with the accuracy thereof included. Amongst all these reports, they didn’t provide feedback when it comes to milliseconds reporting, either.
ACS Execution Services have consented to a fine of $75,00 ($55,000 for FINRA rule violations, with $20,00 for supervisory violations. Furthermore, the company has subjected itself to a censure.