BIDS Trading L.P. has agreed to pay a fine of $200,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From July 2018 to August 2019, BIDS overstated its advertised trade volume on Bloomberg and Thomson Reuters, private subscription-based providers of market data, in violation of FINRA Rules 5210 and 2010. The firm also failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 5210, in violation of FINRA Rules 3110(a) and 2010.

From July 2018 to August 2019, BIDS configured its systems to automatically advertise daily trading volume in numerous securities through two third-party service providers that publish such information, Bloomberg and Thomson Reuters. During this period, two separate but related system changes caused BIDS to overstate the executed trade volume it reported to Bloomberg and Thomson Reuters.

The system changes BIDS implemented inadvertently triggered and exacerbated a programming defect in the trade advertising software that the firm used to send trade volume to Bloomberg and Thomson Reuters, and resulted in BIDS submitting multiple end-of-day volume reports in the same symbols.

The initial change, which was implemented in July 2018, caused the firm to overstate its advertised trading volume in 151 instances, and it resulted in a total overstatement of 12,298,256 shares for 92 securities. The second change, which followed a reconfiguration of the firm’s servers in May 2019, caused BIDS to overstate its advertised trade volume in 1,890 instances, and it resulted in a total overstatement of 427,620,013 shares for 951 securities.

In sum, BIDS overstated its executed trade volume in 2,041 instances by 439,768,869 shares in 1,043 securities.

Through this conduct, the firm violated FINRA Rules 5210 and 2010.

During the relevant period, the firm’s supervisory system was not reasonably designed to achieve compliance with Rule 5210. Specifically, the firm had no supervisory process or written procedures to verify that the trade-volume information it reported to Bloomberg and Thomson Reuters was accurate.

Through this conduct, the firm violated FINRA Rules 3110(a) and 2010.

On top of the fine, the firm has agreed to a censure.


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