SEC Charges Alternative Trading Systems Operator with Market Access Rule Failures

On January 10, the Securities and Exchange Commission announced a settlement with Liquidnet, Inc. an operator of multiple alternative trading systems (ATS) for failing to comply with the market access rule and other rules governing ATSs. The SEC order found that Liquidnet:

• Violated the market access rule by setting inappropriate credit thresholds;
• Failed to adequately limit access to systems containing confidential subscriber trading information;
• Failed to make adequate related disclosures on certain forms; and
• Made material misrepresentations to customers about its market access controls and to subscribers about its ATS safeguards for confidential trading information.

The market access rule requires ATS operators to have controls in place to prevent order entries that exceed credit thresholds for customers. As part of the settlement, Liquidnet agreed to pay a $5 million civil penalty.

Click here to read the SEC’s press release covering the Liquidnet Inc. settlement.