HK fines BNP Paribas for breaking dark-pool rules
Hong Kong's financial regulator fined BNP Paribas SA's local unit HK$15 million ($1.9 million) for breaching rules that set out how its dark pool should operate.
BNP Internal Exchange, the French bank's dark pool, failed to give priority to higher priced orders, even though it claimed to do so in materials provided to clients, the Securities and Futures Commission said in a statement on Monday.
The brokerage treated all orders as having equal priority between November 2009 and April 2011, when it suspended operations, the SFC said.
"No one should dive into dark water without knowing what is hidden," Mark Steward, the SFC's executive director of enforcement, said in the statement. "Operators must have clear rules and procedures in place for operating dark pools."
BNP did not fully resume trading on the dark pool until seven months after it had suspended activity, and it only notified the SFC in January 2013, the regulator said. That breached the terms of BNP Paribas Securities (Asia) Ltd.'s license to run automated trading services.
The bank also failed to obtain client consent to execute orders in the dark pool, a second breach of its license.