In the Matter of UBS Securities LLC

Admin. Proc. File No. 3-16338 (2015)

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In the Matter of UBS Securities LLC

Securities and Exchange Commission
Admin. Proc. File No. 3-16338 (2015)

  • Written by Sharon Feldman, JD

Facts

UBS Securities LLC (UBS) (defendant) operated the dark pool UBS ATS (UBS-ATS). UBS-ATS executed the highest bid or lowest offer first; two orders at the same price were prioritized by time of receipt. UBS-ATS’s PrimaryPegPlus (PPP) order type allowed selected subscribers to add or subtract a percentage of the spread between the national best bid and offer, which usually yielded a sub-penny price. Whole Penny Offset (WPO) orders could be entered at the midpoint between the national best bid and offer plus or minus one cent, and if the bid-offer spread was an odd number of cents, orders at the midpoint would be priced in sub-penny increments. Other order types were accepted and ranked in sub-penny increments because of technical problems, one of which UBS delayed remedying. UBS’s natural-only crossing restriction (NOCR) was available only to orders generated by particular algorithms. At times, UBS-ATS accounted for at least 5 percent of certain securities’ average trading volumes during four of the preceding six months but did not establish standards for granting access to the NOCR, permit fair access, or disclose in Form ATS-R access grants, denials, and limitations. Personnel without UBS-ATS operational or compliance responsibility had access to order-book data. UBS failed to keep and preserve order information, including whether the NOCR was used. UBS consented to the Securities and Exchange Commission (plaintiff) entering an order instituting public administrative and cease-and-desist proceedings, making findings, and imposing a cease-and-desist order and remedial sanctions.

Rule of Law

Issue

Holding and Reasoning ()

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