SEC fines NYSE $4.5m over lax market oversight

The New York Stock Exchange and affiliates will pay a $4.5 millionfine to settle charges it violated market rules, the Securities and ExchangeCommission said Thursday.The NYSE "engaged in business practices that either violated exchange rules orrequired a rule when the exchanges had none in effect," the SEC said in a statement.The NYSE's affiliated routing broker Archipelago Securities was also charged.The NYSE agreed to hire an independent consultant to review its policies andprocedures and to pay, together with Archipelago, the $4.5 million penalty, the SECsaid.None of the parties charged admitted or denied the SEC's findings of violations that occurred from 2008 to 2012, which included failure to notify the agency of proposedrules and rules changes.The agency hit the stock exchange for permitting customers to place computersystems at NYSE data centers without having an exchange rule in place governingthe practice. So-called "co-location" services allow market participants to trade morequickly than from a greater distance.The NYSE did not file a proposed rule with the SEC on co-location and it chargedcustomers "disparate" rates for the service, the SEC said.SEC director of enforcement Andrew Ceresney said the NYSE's actions violated rulesfor ensuring non-discrimination among customers and uniform prices.Regulators also criticized NYSE for permitting trades from a so-called "erroraccount" containing securities positions that were the result of computer systemmalfunctions, unmatched orders or other mistakes.The NYSE permitted trading from these accounts despite not having rules in place toallow the practice, the SEC said. Moreover, the managers of the error account hadaccess to "material nonpublic information" on securities trades, it said.NYSE Euronext was acquired by Intercontinental Exchange last November.