Electronic trading major Interactive Brokers LLC has agreed to pay a fine of $150,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From at least December 2017 to March 2022, for certain customers, Interactive Brokers did not provide a consolidated display that contained all elements of the market data required by the Vendor Display Rule.
In particular, the firm displayed incomplete market data through its desktop, web-based, and mobile trading platforms to customers 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 firm displayed, on some trading platforms, a stock’s last sale price without also displaying the volume and market identification for that sale or the stock’s NBBO.
In addition, the market data that the firm displayed to these customers was on a 15-minute delay, and therefore did not reflect the prices, sizes, and market identifications of the NBBO or the consolidated last sale information for a stock as required by the Vendor Display Rule.
In March 2022, Interactive Brokers began providing all customers with a real-time consolidated display for NMS stocks containing all required market data elements at the point of order entry.
By failing to provide certain of its customers with a consolidated display containing all required market data elements, Interactive Brokers violated Rule 603(c) of Regulation NMS and FINRA Rule 2010.
From at least December 2017 to December 2022, Interactive Brokers failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the Vendor Display Rule.
The firm had no supervisory system or WSPs from December 2017 through May 2021 and it conducted no reviews of its order entry points for compliance with the Vendor Display Rule.
In June 2021, the firm implemented WSPs requiring a review of the order entry points of the firm’s trading platforms to determine whether the firm has provided customers with the required consolidated displays.
While Interactive Brokers conducted these reviews between June 2021 and December 2022, the firm did not review all order entry points across the firm’s trading platforms. In the fourth quarter of 2022, the firm identified 22 order entry points that it had not included in its prior reviews. The firm began reviewing all order entry points in its reviews in January 2023.
By failing to have a supervisory system reasonably designed to achieve compliance with the Vendor Display Rule, Interactive Brokers violated FINRA Rules 3110 and 2010.
On top of the $150,000 fine, Interactive Brokers has agreed to a censure.
