J.P. Morgan Securities LLC has agreed to pay a fine as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

Between September 2019 and May 2021, JPMS failed to take reasonable steps to establish that the intermarket sweep orders (ISOs) it routed met the requirements set forth in Rule 600(b)(31).

Specifically, the firm experienced increased message activity, due in part to the firm’s migration to a new exchange trading platform, which resulted in order routing delays. The delays caused the firm, in certain instances, to rely on outdated market data snapshots of protected quotes that did not reflect the current market at the time the firm routed orders to the trading centers.

As a result, the firm routed a total of 6,682 orders that were priced through other market centers’ protected quotations.

JPMS, therefore, did not take reasonable steps to establish that ISOs it routed met the requirements of Rule 600(b)(31) in violation of Rule 611(c). The firm remediated this issue by May 2021 through updates to its technology infrastructure, including the addition of servers to handle the increased message volumes and minimize processing delays.

Therefore, Respondent violated Rule 611(c) of Regulation NMS and FINRA Rule 2010.

Between September 2019 and July 2021, JPMS’s supervisory system, including its written supervisory procedures (WSPs), was not reasonably designed to achieve compliance with Rule 611(c) of Regulation NMS.

JPMS’s supervision was unreasonable because although JPMS reviewed for latency in its order routing, the firm lacked a process, including WSPs, to verify that the market data snapshots upon which it relied were accurate at the time the firm routed ISOs to trading centers. The firm, therefore, failed to identify the processing delays that resulted in JPMS’s routing of the violative ISOs in this matter.

In March 2021, JPMS implemented a new daily review designed to identify ISOs routed using potentially inaccurate market data, and in July 2021, JPMS updated its WSPs to reflect this review.

Therefore, Respondent violated FINRA Rules 3110(a), 3110(b) and 2010.

JP Morgan Securities consented to the imposition of a censure and a fine in the amount of $18,090 (resolved simultaneously with similar matters for a total fine of $100,000).