Broker-dealer Settles Disciplinary Action for Only Using Manual Surveillance System

Published On August 7, 2019

A registered broker-dealer has settled disciplinary action brought by six US securities exchanges for solely using a manual surveillance system between November 2012 and January 2016. 

Clear Street Markets LLC violated the Securities and Exchange Commission’s Market Access Regulation that required it to maintain a system of risk-management controls and supervisory procedures to control the risks associated with market access. 

The exchanges, including Cboe BZX and EDGX, found that Clear Street had handled between five and 20m orders a day but had only conducted manual reviews to monitor market disruption such as layering or spoofing. The exchanges held that, while there had been no instances of identified abuses during the specified period, the firm’s manual surveillance system was not a reasonable system of risk management control or supervisory procedure. 

The firm has agreed to pay a fine of $60,000 to settle the disciplinary action.