Bluefin Capital Management, LLC has agreed to pay a fine of $125,000 as a part of a settlement with Nasdaq Phlx LLC.

As a large industry member, Bluefin was required to begin reporting its order event data to the CAT Central Repository on June 22, 2020. From June 2020 to August 2022, Bluefin failed to accurately and timely report billions of order events to the CAT Central Repository.

First, from June 22, 2020, through July 20, 2022, Bluefin reported over 1.4 billion equity and option events to CAT that contained inaccurate data in the Firm Designated ID (FDID) field.

In the FDID field, members must report a unique and persistent identifier for each trading account. Due to a configuration error at the firm’s reporting agent, Bluefin reported the same identifier for all trading accounts during this period.

As a result of a FINRA exam on behalf of Phlx, Bluefin learned of the error in March 2022 and resolved it by replacing its CAT reporting agent in July 2022.

Second, from December 2021 to August 2022, Bluefin failed to timely report over 1.8 billion events to CAT. These violations occurred because, from December 13, 2021, to April 22, 2022, Bluefin failed to report over 1.8 billion option route cancellation (MOCR) and option route modification (MOMR) events to CAT.

Beginning in December 2021, these failures caused a significant spike in linkage errors for Bluefin. However, it took Bluefin until April 2022 to identify that the root cause of the linkage errors was its reporting agent’s failure to report any MOCR and MOMR events.

On or about April 22, 2022, Bluefin’s reporting agent updated its code to begin reporting MOMR and MOCR events to CAT. In June and August 2022, the firm submitted corrections and reported over 1.8 billion MOMR and MOCR events to CAT late.

Therefore, Bluefin violated Phlx Rules General 7, Sections 3 and 11.

From June 2020 to November 2022, Bluefin had no WSPs to prevent or detect violations of CAT reporting rules and conducted no reviews of its accepted CAT data against its internal order records for accuracy.

In practice, the firm only reviewed the CAT Reporter Portal on a daily basis, which was not reasonable to identify inaccurate reporting issues, like the FDID issue described above, that did not cause late reports, linkage errors, submission or ingestion errors, or rejections to appear on the CAT Reporter Portal.

Because Bluefin failed to conduct any such review, it did not identify that it was reporting inaccurate FDIDs to CAT for over two years.

As a result, Bluefin violated Phlx Rules General 9, Section 20, General 9, Section 1(c) (on and after January 22, 2021), and Options 9, Section 1 (for options conduct before January 22, 2021), and PSX Rule 3503 (for equities conduct before January 22, 2021).

On top of the $125,000 fine, the firm has agreed to a censure.