Citadel Securities Fine - $1M - Trade Reporting – FINRA - Oct 2024

Quick facts

• Citadel Securities Fine Amount: $1,000,000

• Date: 9 October 2024

• Violation Period:  22 June 2020 - 28 August 2024

• Primary Violation: Trade Reporting

Citadel Securities fINE Overview

FINRA has fined Citadel Securities LLC $1,000,000 for failing to timely and accurately report tens of billions of equity and option order events to the Consolidated Audit Trail (CAT) Central Repository.

The violations occurred over multiple years, beginning from the start of the firm's CAT reporting obligation on June 22, 2020, through August 28, 2024.

Details of the Citadel Securities Fine

Initial Period (June 2020 - July 2022):

• 42.2 billion inaccurately reported equity and option order events.

• Three major error types accounted for 41.8 billion events:

  • Incorrect "leaves quantity" reporting for 31.2 billion canceled orders.

    • Should have reported "0" for fully canceled orders.

    • Instead reported the quantity of shares canceled.

  • Misapplication of the "representative eligible" indicator for 6.3 billion new orders:

    • Applied the "representative eligible" indicator incorrectly.

    • Should have used the "representative" indicator.

    • This prevented linking to corresponding customer orders.

  • Missing IOC Time-in-Force codes for 4.3 billion orders.

    • Failed to populate the Immediate or Cancel (IOC) Time-in-Force code.

Four new problems were discovered between December 2021 and June 2024, though the enforcement action doesn’t disclose the nature thereof.

• These issues affected about 3.2 billion equity order events.

• The firm fixed the problems by June 30, 2024 and submitted all corrections by August 28, 2024.

Citadel Securities Fines and Penalties

• $1,000,000.

Select Quotes

• "CAT data is an integral part of FINRA's automated market surveillance program. FINRA uses CAT data to detect manipulative activity and other potential violations of federal securities laws and FINRA rules."

• "Inaccurate, incomplete, or untimely transaction and order reporting can negatively affect the regulatory audit trail and the quality of FINRA's surveillance patterns, as well as FINRA's ability to accurately reconstruct market events."

• "FINRA Rule 6893(a) requires members to 'record and report data to the Central Repository as required by this Rule Series in a manner that ensures the timeliness, accuracy, integrity and completeness of such data.'"

Sources

• FINRA - Disciplinary Action Online - Case 2020068778601

• FINRA - FINANCIAL INDUSTRY REGULATORY AUTHORITY LETTER OF ACCEPTANCE, WAIVER, AND CONSENT NO. Citadel Securities LLC (Respondent)