Clear Street LLC has agreed to pay a fine of $175,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

Clear Street routed options orders to a third-party broker-dealer for execution on options exchanges of which Clear Street was not a member. In doing so, Clear Street marked each order with an origin code indicating whether the order originated from a Customer or a Professional Customer.

A Professional Customer origin code is required for all option orders submitted by customers who are not broker-dealers and who place an average of more than 390 options orders per day during any month in a quarter. When calculating the 390-order threshold for the options exchange on which Clear Street’s orders were executed, a complex options order comprised of nine or more option legs counted as multiple orders, with each option leg counting as its own separate order.

Between January 2022 and June 2023, Clear Street failed to accurately count multi-leg options orders when determining a customer’s average options orders per day, because the firm counted multi-leg options orders containing nine or more options legs as one order. As a result, Clear Street marked this customer’s orders as originating from a Customer when they in fact originated from a Professional Customer.

During this time, Clear Street mismarked the origin codes of 162,809 orders, totaling 998,170 contracts, that were executed on options exchanges. These inaccurate origin codes were reflected in the order memoranda for the options orders in question.

Therefore, Clear Street violated Section 17(a) of the Securities Exchange Act, Exchange Act Rule 17a-3(a)(6)(i), and FINRA Rules 4511 and 2010.

Between February 2021 and August 2023, Clear Street used a report generated by its third-party post-trade surveillance platform to supervise the accuracy of its options origin codes. However, this report did not accurately reflect the trading activity of Clear Street’s customers because it did not correctly count multi-leg options orders.

The firm incorrectly counted multi-leg options orders containing nine or more options legs as one order. The firm remediated this supervisory deficiency in August 2023 after being alerted to the issue by FINRA.

Therefore, Clear Street violated FINRA Rules 3110 and 2010.

In addition to $175,000 fine, the firm has agreed to a censure.