J.P. Morgan Securities LLC
The findings stated that the firm experienced increased message activity, due in part to the firm’s migration to a new exchange trading platform, which resulted in order routing delays. The delays caused the firm, in certain instances, to rely on outdated market data snapshots of protected quotes that did not reflect the current market at the time the firm routed orders to the trading centers.
As a result, the firm routed orders that were priced through other market centers’ protected quotations. Ultimately, the firm remediated this issue through updates to its technology infrastructure, including the addition of servers to handle the increased message volumes and minimize processing delays.
The findings also stated that the firm failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with Rule 611(c) of Regulation NMS. Although the firm reviewed for latency in its order routing, the firm lacked a process, including WSPs, to verify that the market data snapshots upon which it relied were accurate at the time the firm routed ISO to trading centers.
Therefore, the firm failed to identify the processing delays that resulted in its routing of the violative ISOs. In time, the firm implemented a new daily review designed to identify ISOs routed using potentially inaccurate market data and updated its WSPs to reflect this review.
