In a settlement with the Bourse de Montréal’s (MX) regulatory division, UBS Securities LLC, was sanctioned for several alleged violations of the exchange’s rules — primarily stemming from its oversight of access to its electronic trading systems.
The MX’s disciplinary committee approved a proposed settlement between the firm and the MX, which included a total fine of $220,000 and $10,655 in costs, to resolve a complaint that alleged assorted rule violations.
According to the decision, the firm “acknowledged breaching the [exchange’s rules] pertaining to assessments of sponsored access clients, the reporting of accumulated positions, access to the Bourse’s electronic trading system, and having the necessary systems and procedures in place … to ensure compliance with the [rules] and ensure detection of any violations.”
The rule breaches were initially uncovered in a compliance exam by the MX’s regulatory division.
In particular, the MX alleged that, between Jan. 1, 2018 and Aug. 18, 2021, the firm failed to conduct annual assessments of sponsored access clients, failed to report trading positions for a couple of omnibus accounts and didn’t properly supervise these activities.
“Sponsored access clients represent several inherent risks and as such, [firms] are required to conduct annual assessments of these clients to ensure regulatory compliance, risk mitigation and market integrity,” the committee’s decision said. It added that these reviews require a comprehensive examination of the client’s controls, policies and procedures.
The decision noted that the firm failed to conduct the required assessment for two clients in 2018, seven in 2019, eight in 2020 and seven in 2021. The reviews weren’t carried out because of job changes within the firm and key personnel leaving the firm, it said.
The firm remediated the issue by implementing updated procedures in August 2021, and the trade reporting issue was also corrected at the same time, it noted.
Additionally, the MX alleged that between June 21, 2019 and July 30, 2024, the firm provided access to the exchange’s trading system for more than 50 employees without prior approval; and it didn’t properly supervise its employees’ electronic access.
The settlement also noted that the firm didn’t generate any gains, or avoid any losses, as a result of the breaches; nor was any client harmed. It also said that the firm cooperated thoroughly with the exchange’s investigations, and that the firm corrected the underlying shortcoming that led to the rule violations.