The Ontario Securities Commission (OSC) has sanctioned Toronto-based Omega Securities Inc, an alternative trading system (ATS), for shortcomings in its systems.
An OSC hearing panel has approved a settlement between Omega and OSC staff, in which the firm agreed to pay a $500,000 penalty to resolve allegations that it violated securities rules due to deficiencies in its trading systems.
The deficiencies resulted in Omega disseminating inaccurate information about the identity of brokers for certain transactions, and the time that certain orders were received and when they were executed, according to the OSC panel’s reasons for approval.
OSC staff initially sought an order suspending Omega’s registration. However, the commission declined to issue that order, deciding instead to impose certain conditions on the firm’s registration, including requirements that it upgrade its systems. The firm and the regulator subsequently negotiated a settlement, including an administrative penalty.
In approving the settlement, the panel stated: “Accurate and timely collection and dissemination of information by marketplaces is of critical importance to the integrity of Ontario’s capital markets and to the confidence of both participants and investors in those markets. The dissemination of inaccurate market information could result in an unfair advantage to some investors and unfair disadvantage to others.”
Accurate information is also required for regulators to properly oversee the markets, “a marketplace’s non-compliance with any regulatory transparency requirements must be treated as a serious matter,” the panel added.
Although the monetary penalty sends a strong deterrent message, Omega has already “paid a financial price substantially larger” than the penalty in order to upgrade its systems, the panel said.