BGC Financial agrees to pay $100,000 as part of settlement with FINRA

Maria Nikolova

The fine stems from BGC Financial’s transaction reporting failures which occurred from November 2, 2015 through September 27, 2017.

BGC Financial, a subsidiary of BGC Partners, L.P., has agreed to pay a fine of $100,000 as a part of a settlement with the United States Financial Industry Regulatory Authority (FINRA).

Between July 1 and September 30, 2016, and April 1 and September 30, 2017, the firm reported to TRACE 506 transactions with an incorrect time of trade execution. These violations were the result of the firm’s traders or back office personnel manually recording an incorrect time of trade execution.

Also, between November 2, 2015 and September 27, 2017, the firm reported 1,304 transactions in TRACE-Eligible Securities that it was not required to report. These violations were the result of the firm’s system inadvertently reporting internal transfers of securities that were not required to be reported to TRACE.

Furthermore, between July 1 and September 30, 2016 and April 1 and September 30, 2017, due to manual error, the firm recorded the incorrect time of trade execution on the memorandum of 77 brokerage orders.

Finally, between November 2, 2015 and September 27, 2017, the firm did not have a supervisory system, including written supervisory procedures (WSPs), that was reasonably designed to achieve compliance with TRACE reporting requirements. The firm’s WSPs required its Trade Support Department to review: (i) the TRACE and Trade Reporting and Quotation Service (“TRAQS”) websites to identify errors; (ii) Trade Report Alerts Logs on the FINRA TRACE and TRAQS website for capacity mismatches with counter-parties; (iii) the Bloomberg Regulatory Monitor screen to identify reports that are rejected by FINRA TRACE and TRAQS systems; (iv) TRACE Reporting Error messages generated real-time in the Bloomberg Messaging System; and (v) TRACE exception reports generated from the firm’s Global Middle Office system.

None of the foregoing reviews, however, included a review for mismatching execution times, which resulted in the firm’s failure to detect its reporting of inaccurate execution times. Additionally, the firm did not have a procedure to monitor whether it was reporting information to TRACE that it was not required to report.

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