The US regulators have accused the exchange that a few brokers were able to manipulate a component of the exchange’s order-matching system to get better prices at the expense of other investors, as reported by Bloomberg.
As per an order issued by the US Securities and Exchange Commission (SEC), a broker abused the trading system from 2006 to 2010 to provide benefits to hedge-fund clients at the cost of other traders.
The US watchdog found that the bourse house failed to put policies in place, which have been prepared to identify and thwart trading and financial violations.
The exchange, which has typical 0.4% of daily US equity volume in 2013, also failed to deploy surveillance procedures to check how the brokers have been using its system from 2006 to 2008.
The SEC order was quoted by the news portal as saying, "The validated cross system permitted institutional brokers to execute transactions at stale prices within previously captured NBBO."
"The system was thus not reasonably designed to prevent validated cross trades from trading through the NBBO prevailing at the time of execution."
