FINRA fines TP ICAP Global Markets Americas $400,000 for reporting deficiencies
TP ICAP Global Markets Americas LLC, formerly known as ICAP Securities USA LLC (ICAP) has agreed to pay a $400,000 fine as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Between July 2016 and May 2023, ICAP inaccurately reported to the Trade Reporting and Compliance Engine (TRACE) approximately 600,000 transactions in TRACE- Eligible Securities without the required “No Remuneration” (NR) indicator in violation of FINRA Rules 6730(d) and 2010.
Between July 2016 and December 2020, the firm inaccurately reported approximately 370,000 multi-leg transactions in TRACE-Eligible U.S. Treasury securities and securitized products with non-broker-dealer customers through its trading desk. In these transactions, the firm earned a mark-up or mark-down on one leg of the transaction, but not on the other leg of the transaction.
The firm incorrectly determined the applicability of NR indicator reporting obligations with respect to these transactions and failed to report the leg of the transaction on which it did not earn a mark-up or mark-down using the NR indicator.
The firm was unaware of the NR indicator reporting issues until FINRA notified the firm in late 2020, and the firm fixed the reporting issue in February 2021. However, the firm’s remediation was not effective with respect to U.S. Treasury securities because of a coding error that misidentified counterparties to U.S. Treasury transactions.
As a result, between March 2021 and May 2023, although the firm did not earn a commission, mark- up or mark-down on the transactions, the firm inaccurately reported approximately 230,000 transactions in TRACE-Eligible U.S. Treasury securities with non-broker-dealer customers without the NR indicator when they should have been reported with the NR indicator.
By failing to report the NR indicator on approximately 600,000 transactions in TRACE- Eligible Securities, the firm violated FINRA Rules 6730(d) and 2010.
Between July 2016 and May 2023, the firm failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, that was reasonably designed to achieve compliance with FINRA Rule 6730(d). The firm’s supervision of its TRACE reporting was not reasonable because it did not have any written procedures with respect to reviewing the NR indicator, nor did it have a process to check the accuracy of the NR indicator as required by FINRA Rule 6730(d).
Therefore, the firm violated FINRA Rules 3110 and 2010.
On top of the $400,000 fine, ICAP has agreed to a censure.