OSC approves settlement over allegations firms operated marketplaces without authorization
A Panel of the Ontario Securities Commission (OSC) has approved a settlement agreement with Bloomberg Trading Facility Limited (BTFL) and Bloomberg Trading Facility B.V. (BV), two foreign-based firms that operate multilateral trading facilities for fixed income securities and swaps.
The settlement follows allegations by OSC Staff that the firms operated marketplaces without authorization in Ontario, filed applications for exemptive relief with the Commission containing incomplete and inaccurate information and, in the case of BTFL, failed to comply with terms and conditions set out in an exemptive relief order.
As part of the settlement agreement, BTFL and BV have paid an administrative penalty of CAD $2,506,011.80 and disgorged $663,305.20. The payments take into account, among other things, BTFL and BV’s level of cooperation with OSC Staff. To provide transparency to market participants, OSC Staff have included detailed descriptions of how these sanctions were calculated in the settlement agreement. The Respondents will also conduct an internal review and submit a report to OSC Staff on their practices and procedures to ensure compliance with Ontario securities law.
“These are two sophisticated corporations, conducting business on a global scale, that failed to comply with Ontario securities laws,” said Jeff Kehoe, Director of the Enforcement Branch at the OSC. “These entities must be vigilant in monitoring compliance of their activities with securities laws and have an obligation to report accurately to regulators. This expectation applies to every entity carrying on business in Ontario.”
In settling this matter, BTFL and BV admit that before they sought or obtained recognition or an exemption order from the Commission, they carried on business as exchanges by providing institutional Ontario users with access to trade fixed income securities and swaps.
The Respondents also admit that the applications they filed with the Commission requesting exemptive relief from the requirement to be recognized as exchanges contained inaccurate and incomplete information insofar as neither disclosed the fact that Ontario users had already been onboarded and engaged in trading on their respective multilateral trading facilities.
After BTFL obtained an exemption order, it failed to prevent fixed income trading on its multilateral trading facility, contrary to the terms and conditions of the order, and failed to disclose this activity in quarterly reports filed with OSC Staff.