NYSE Agrees to Settle Charges Relating to Differentials in Speed of Information Delivery (SEC Order)

The SEC announced “first-of-its-kind” charges against the New York Stock Exchange for compliance failures that gave certain customers an “improper head start” on trading information ahead of ordinary public customers.

According to the SEC’s order against NYSE, the exchange violated SEC Regulation NMS over an extended period of time beginning in 2008. The NYSE allegedly sent data through two of its proprietary feeds before sending data to the consolidated feeds, and failed to monitor the speed of its proprietary feeds compared to its data transmission to the consolidated feeds.

Lofchie Comment:  The issue that the SEC press release most trumpets is the financial penalty against the exchange.  However, there are a few other aspects of the case that seem interesting: (i) it is not clear the extent to which the rule violation was caused by a commission or an omission; (ii) the order very much emphasizes the importance of involving the compliance department in technological processes; and (iii) as with the recent settlement involving Nasdaq, this order may raise the question as to whether exchanges should have immunity from actions brought by their customers. 

View SEC Order Against NYSE (links externally to SEC website).
See also: SEC Press Release; SEC Chart of NYSE Data Feeds.