NYSE opposes push for additional testimony in HFT case
A securities class action case involving allegations of market manipulation via high frequency trading (HFT) continues at the New York Southern District Court.
New York Stock Exchange LLC, NYSE Arca Inc., and Chicago Stock Exchange, Inc, which are among the defendants in this case, are now opposing requests for additional deposition testimony. This becomes clear from a document filed by NYSE with the Court on March 10, 2021.
Let’s note that on March 5, 2021 at 5:30 p.m., the plaintiffs sent NYSE a notice that calls for a witness to be produced on March 11, 2021 to testify regarding NYSE’s order-level data (topics A.1-A.4) and the following substantive topics:
- C.2. “Your development, market analysis, approval, regulation, pricing structure, marketing, and sale of co-location services, proprietary data feeds, and Order Types.”
- C.3. “Your policies, practices, and procedures related to the sale and use of colocation services, proprietary data feeds, and Order Types.”
- D.2. “Any meetings with the SEC, FINRA, or any other regulators related to colocation services, proprietary data feeds, or Order Types.”
During a meet and confer call held on March 8, NYSE explained its objections to Plaintiffs’ counsel. Plaintiffs declined to withdraw the notice.
Now, NYSE refuses to produce additional witnesses. The Exchange explains that topics A.1, A.2, A.3 and A.4, concerning NYSE’s order-level data, are remarkably broad: for instance, Topic A.1 calls for testimony about four different data storage systems used by three NYSE exchanges at different times over a ten year period, with some systems being modified extensively during that time. Having witnesses answer deposition questions about those systems is not a realistic or efficient method to answer questions Plaintiffs may have about those systems, and would amount to a “memory contest” about subjects better suited to a written response, NYSE says.
Regarding the other topics, NYSE argues that the breadth of these requests is astounding: Topic C.2 is “Your development, market analysis, approval, regulation, pricing structure, marketing, and sale of co-location services, proprietary data feeds, and Order Types.” It is difficult to even consider how to prepare single witnesses on this topic, which encompasses knowledge which would have to be drawn from individuals and departments working on diverse issues over more than a decade at three exchanges, NYSE says.
NYSE is one of the many defendants in this lawsuit, which targets some of the major stock exchanges. The lawsuit was filed on behalf of investors that traded on a registered public stock exchange or a U.S.-based alternate trading venue, between April 18, 2009 and the present, and asserted claims against: (1) registered public stock exchanges located in the United States; (2) a class of brokerage firms; and (3) a class of HFT firms.
The plaintiffs claim, inter alia, that certain defendants allowed HFT firms to profit at the expense of the class and to manipulate securities markets in violation of federal securities laws.