March 26, 2012

The broker dealer arm of Getco was fined $450,000 by regulators for failing to properly supervise its high-frequency trading operation.

According to media reports, the fine stemmed from a request by exchange operator Nasdaq OMX for the Financial Industry Regulatory Authority to examine trading at Getco subsidiary Octeg from the day after the flash crash of May 6, 2010, through the following December. Nasdaq ultimately determined that Octeg lacked reasonable oversight of high-frequency and algorithmic trading.

In addition to the fine, Octag has been censured and told to bring in an independent consultant to overhaul its operation within 60 days. The company agreed to pay the fine, but did not admit wrongdoing.

"While there was no harm caused to the market or to any participants, we are always looking for ways to further enhance our policies, procedures and controls," Getco said in a statement.

ABOUT THE AUTHOR
As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced ...