Instinet

In April 2018, FINRA – along with the various exchanges – settled with Instinet for a total of $1.575 million for violations of the SEC Market Access rule of customers entering in orders electronically through its MPID. Specifically, Instinet:

• Failed to detect or review pre-open non-bona-fide orders (spoofing);

• Failed to pre-approve individual traders utilizing their MPID or understand if the trader had been terminated (KYC);

• Failed to understand whether wash trader occurred because identities of traders were unknown;

• Failed to detect layering/spoofing instances because the surveillance system did not detect series of orders that improve the National Best Bid ("NBB") or National Best

• Offer ("NBO"); and

• Failed to appropriately address the alerts that the firm did receive through its surveillance system.

 Instinet was also fined in Hong Kong for algorithmic and electronic trading system failures, breaching a code of conduct related to the systems and its alternative liquidity pool.

 Please note FINRA Regulatory Notice 15-09 that addresses Supervision and Control practices for Algorithmic Trading strategies.