RBC Capital Markets
The findings stated that these violations were caused by errors in the reporting logic of the firm’s internal risk system that it used to compile and submit OTC LOPR reports and it remained undetected for years.
The findings also stated that the firm failed to establish and maintain a supervisory system reasonably designed to comply with its LOPR reporting obligations. The firm used supervisory systems to detect inaccurate LOPR reports. Those systems were not designed to detect, and in fact did not detect, instances where the firm failed to report OTC options positions to the LOPR. Further, the firm had no system to review whether contract quantities were reported accurately.
In addition, the firm’s WSPs identified firm principals who were responsible for conducting supervisory reviews of the firm’s LOPR reports, but these procedures did not provide any guidance or set forth a process for how these principals should detect instances where the firm failed to report OTC options positions to the LOPR or to confirm the accuracy of reported contract quantities.
Ultimately, the firm implemented multiple new surveillance reports and procedures to determine whether its reportable OTC positions had been reported and were accurate.
