September 22, 2023

NYSE to Pay $5 Million to Settle Favoritism Charges

The case against the exchange, brought by the Securities and Exchange Commission, is part of a wider crackdown by the SEC on exchange compliance issues as the agency pursues more market structure-related investigations.

In a statement, the New York Stock Exchange, operated by NYSE Euronext, said on Friday the SEC was not alleging “any intentional misconduct or that the NYSE data delays caused any investor harm.”

“NYSE is pleased to have this matter resolved, and believes that the settlement is in the best interest of its shareholders, clients and employees,” said NYSE Euronext Chief Executive Duncan Niederauer.

The SEC’s case hinges on alleged violations of a rule known as REG NMS, which was adopted in 2005 to ensure customers get the best price and to promote fair access to market data.

The rule prohibits exchanges from improperly sending market data to proprietary customers before sending the information to the consolidated tape for broader public consumption.

The SEC said that NYSE violated the NMS rule beginning in 2008 by sending data through two of its proprietary feeds before sending it to the consolidated feeds.

NYSE agreed to retain an independent consultant to review its systems. The exchange operator said that technology upgrades in 2010 and 2011 corrected the problems at the center of the SEC’s investigation.

(Reporting By Sarah N. Lynch and Aruna Viswanatha; Editing by Jeffrey Benkoe and Steve Orlofsky)

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