HK fines BNP Paribas for break­ing dark-pool rules

The Pak Banker - - COMPANIES/BOSS -

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.

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