Exane Inc.
No pre-trade controls – including credit limit controls – were automated nor were they applied on a pre-trade basis and, therefore, it failed to establish controls to prevent the entry of orders that exceed appropriate preset credit or capital thresholds in the aggregate for each customer.
Instead, the firm utilized erroneous order controls provided by an exchange (though it was still required to perform appropriate due diligence regarding the controls) as well as post-trade execution reports.
Exane also failed to document its annual reviews of the business activity of the firm in connection with market access whereas its annual review documents did not contain a specific discussion of the SEC market access rule or reference a specific review of the business activity of the firm related to market access undertaken to assure the overall effectiveness of its risk management controls and supervisory procedures.
The CEO certifications regarding market access were also deficient in that they did not contain an affirmative statement that the firm’s risk management controls and supervisory procedures complied with the relevant paragraphs of the SEC market access rule.
