BGC Financial, L.P. has agreed to pay a fine of $200,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From December 2014 through June 2023, BGC failed to establish and maintain a supervisory system reasonably designed to detect potential spoofing and layering in equity securities, in violation of FINRA Rules 3110 and 2010.

From December 2014 through June 2023, BGC’s supervisory system was not reasonably designed to detect potential spoofing and layering, which are prohibited by FINRA rules and the federal securities laws. Between December 2014 and January 2021, BGC did not have any supervisory system, including surveillances or supervisory reviews, to monitor for potential spoofing or layering by BGC traders.

In February 2021, BGC implemented automated surveillance to identify potential instances of spoofing and layering by its traders. On a daily basis, a BGC supervisor reviewed daily exceptions for potential issues and escalated all issues that may represent a rule violation to BGC’s Head of Surveillance. Evidence of these reviews is documented, including the rationale and supporting documentation for closure or escalation.

The surveillance, however, had certain unreasonable parameters. For example, certain of BGC’s surveillance parameters for spoofing and layering required the entry of a large order on both sides of the market, a significant number or high total share volume of layered orders on one side of the market, or a very high volume of cancelled orders.

These parameters were unreasonable because layering and spoofing could also occur with smaller-sized or single orders, and BGC’s trading included such smaller-sized or single orders.

By virtue of the foregoing, BGC violated FINRA Rules 3110 and 2010.

In addition to the fine, the firm has agreed to a censure.