Citadel Securities Agrees to $1 Million Settlement with FINRA

Citadel Securities LLC has reached a settlement with the Financial Industry Regulatory Authority (FINRA), agreeing to pay a fine of $1 million due to violations of reporting obligations under FINRA Rules 6830, 6893, and 2010. This settlement stems from the firm’s failure to timely and accurately report data related to tens of billions of equity and options order events to the Consolidated Audit Trail (CAT) Central Repository.

The reporting obligations began on June 22, 2020, but Citadel Securities encountered significant issues, inaccurately reporting data fields for approximately 42.2 billion order events up until July 31, 2022. Notably, the firm made errors across 33 unique types of reporting inaccuracies, with three types contributing to the majority of these mistakes.

Citadel Securities Agrees to $1 Million Settlement with FINRA

Specifically, Citadel failed to report “0” in the “leaves quantity” field for canceled orders, affecting 31.2 billion events. It also incorrectly applied the “representative eligible” indicator instead of the correct “representative” indicator for 6.3 billion new order events and neglected to populate the Immediate or Cancel (IOC) Time-in-Force code for 4.3 billion IOC order events.

In addition, the firm did not report around 580 million order events in a timely manner during the same period. While Citadel Securities rectified the initial 33 error types by September 22, 2022, it subsequently identified four additional issues affecting 3.2 billion equity order events, which were also remediated by June 30, 2024.

The violations were due to various coding and system issues, as well as challenges with data received from third parties. In addition to the monetary penalty, Citadel Securities has accepted a censure as part of the settlement agreement.

As the financial landscape continues to evolve, firms must prioritize the integrity of their reporting processes to avoid regulatory scrutiny and potential penalties. The resolution of this case, which includes both a substantial fine and a censure, serves as a reminder for all market participants about the necessity of adhering to established regulations to uphold market integrity and protect investors.

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