Flow Traders U.S. LLC

Flow Traders U.S. was fined $50,000 for failing to establish, document, and maintain financial risk management controls and supervisory procedures reasonably designed to prevent the entry of orders that exceed appropriate pre-set capital thresholds in the aggregate for the firm.

The findings stated that the maximum position limit value control set for each individual equity symbol was narrower than the maximum amounts set forth in the firm’s WSPs. However, even these narrower position limits were unreasonable.

In addition, the firm failed to demonstrate how the thresholds were reasonably designed to meaningfully limit the financial exposure generated from the firm’s trading activity.

The findings also stated that the firm failed to establish, document, and maintain financial risk management controls and supervisory procedures that were reasonably designed to prevent the firm’s entry of erroneous orders.

The firm’s actual limits for each symbol were narrower than the maximum amounts set forth in the WSPs. However, even these narrower limits were unreasonable. The firm failed to demonstrate how its daily maximum order size thresholds were reasonably aligned with the trading characteristics of each symbol.