Financial Industry Regulatory Authority (FINRA) fines GTS Securities LLC for alleged violation of FINRA rules。

From October 2019 to the present, GTS has failed to establish, record and maintain a system of risk management controls and supervisory procedures to reasonably prevent the entry of wrong orders, in violation of Section 15 (c) (3) of the Securities Exchange Act of 1934, "Exchange Act" rules 15c3-5 (b) and 15c3-5 (c) (1) (ii), and US Financial Industry Regulatory Authority rules 3110 and 2010。

On October 23, 2019, GTS sent 635 erroneous orders (standard limit orders and market maker pending orders) to the market generated by the company's three trading algorithms through the company's trading engine.。Where market maker pending orders are limit orders, which are continuously repriced by the exchange based on a specified offset from the National Best Buy or Ask Price (NBBO)。

Prior to the opening of trading on October 23, 2019, GTS underwent a technical modification to its trading engine, resulting in the company's three algorithms issuing orders that did not include MMPO orders。These orders trigger GTS's price band risk control, rejecting orders whose price exceeds the reference price (i.e., the last trade, or the previous day's closing price if there is no last trade) by a certain percentage, which in turn triggers an internal rejection alert to prevent orders from being sent to the market.。

However, GTS manually disabled the control of these three algorithms, allowing orders to be sent to the market, based on the failure to detect the impact of technological changes on its MMPO, and the erroneous belief that the price band risk control was malfunctioning。As a result, GTS sent a total of 635 wrong orders to the market, and the limit price deviated significantly from the NBBO at the time.。On October 23, 2019, GTS filed a manifestly erroneous declaration.。

Of the 635 erroneous orders, 348 were partially or fully executed, with a total notional value of more than $1.5 million.。In addition, 33 transactions were withdrawn, seven of which were withdrawn by NASDAQ.。The rest of the wrong orders were not executed because GTS detected them as wrong after routing and stopped them。

From October 2019 to date, GTS has failed to establish, document and maintain a system of risk management controls and oversight procedures to reasonably prevent the entry of incorrect orders.。

During this period, GTS's price band risk control was not designed to prevent the entry of standard limit orders generated by the three trading algorithms associated with the wrong order on October 23, 2019, as well as certain other trading algorithms routed to Nasdaq.。For standard limit orders generated by these trading algorithms, GTS sets its price band risk control parameter to 50% of the reference price。

The design of this parameter is not reasonable and cannot prevent the input of wrong orders because it is significantly higher than the parameter reserved by the National Stock Exchange for reviewing obviously wrong transactions, and GTS does not provide reasonable reasons to support the company's threshold。

In addition, during the period from October 2019 to at least January 2022, GTS has no written policies, procedures or controls on processes and standards that cover or disable market access risk controls, including under what circumstances company personnel can disable the company's price controls。

Therefore, GTS violated Section 15 (c) (3) of the Exchange Act, Sections 15c3-5 (b) and 15c3-5 (c) (1) (ii) of the Exchange Act, and Rules 3110 and 2010 of the Financial Industry Regulatory Authority.。

The company has agreed to accept reprimands and fines totaling $100,000, of which $50,000 must be paid to the Financial Industry Regulatory Authority.。The remaining penalty will be paid to Nasdaq。