Level ATS Sees Sign of Rebound in Volume
January 3, 2013
Following the SEC’s announcement of the settlement, several customers stopped sending their orders into the LeveL dark pool. In October, LeveL chief executive Whit Conary told Traders Magazine that a quarter of its customers had stopped sending their flow to the dark pool.
The smart order involved has a retained memory function that, according to LeveL, is a "commonplace" feature of such machines.
That "memory feature," the SEC said, enabled the Lava trading unit of Citigroup to retain a record of any order submitted to various market centers, and to use that information to make automated routing decisions. The feature retains the symbol, side, source, quantity, and received time for these orders; and can be turned on or off.
In a letter to customers, Conary said Lava confirmed in April 2011 that it no longer was using the feature when it involved LeveL subscribers.
The SEC also noted "there is no evidence that information about LeveL's unexecuted orders was displayed, or otherwise communicated to, clients of the Order Routing Business or other third parties.'' The SEC also said actual execution prices were not affected by the use of the memory feature.
Nonetheless, eBX had "insufficient safeguards and procedures to protect subscribers' confidential trading information,'' the SEC said.