The Securities and Exchange Commission is charging Latour Trading LLC with violating the agency\u2019s rules regarding market structure. To resolve the case, the high-frequency trading firm will pay over $8M, including more than $3 million of disgorgement of gross trading profits, rebates it received from exchanges, and prejudgemenet interest, as well as a $5 million civil penalty.<\/p>\n
According to the SEC, Latour violated the SEC\u2019s Market Access Rule and Regulation National Market System for almost four years, sending millions of orders that were non-compliant to US exchanges. The Commission noted that because the firm shares parts of its electronic trading infrastructure with parent company Tower Research, some of the employees from that company could modify the computer code without the firm\u2019s approval or knowledge.<\/p>\n
In 2011, Tower Research made a coding modification that produced an error in the infrastructure, causing Latour to transmit millions of orders to exchanges that were not in compliance with Regulation NMS\u2019s requirements. Specifically, from 10\/10 through 8\/14, Latour sent about 12.6 million intermarket sweep orders for over 4.6 billion shares.<\/p>\n
With ISOs, trade centers may execute them at prices that might otherwise seem to violate Regulation NMS\u2019s Rule 611, which usually mandates that trades be done at the best available price displayed. Also, trade centers can execute them right away according to the ISO router\u2019s obligation to transmit additional orders against better price displayed quotes. <\/p>\n