The Disciplinary Committee of NASDAQ OMX Stockholm AB (“the Exchange”) has found that in four instances Pareto Öhman AB (”Öhman”) has contravened the Exchange’s rules and regulations and has therefore ordered Öhman to pay a fine of five hundred thousand Swedish kronor (SEK 500,000).
Two of the cases pertain to breaches of rules and regulations in respect of automatic order entry caused by a programming defect in Öhman’s software for algorithm trading. The two other cases pertain to breaches concerning order entries that do not reflect the current market value.
Two of the cases involved Öhman completing erroneous automatic orders caused by incorrect programming of Öhman’s software for algorithm trading. Since Exchange members have a responsibility to thoroughly test software prior to its use, Öhman is considered to have breached the Exchange rules in both of these cases.
In the two other cases, Öhman performed order entries that did not reflect the prevailing market value. The first case pertained to a manual error, whereby it was erroneously entered as a sell order, thus resulting in several shares being sold at a price that deviated from the prevailing market price. In the second case, Öhman failed in its responsibility as a liquidity provider by setting prices that deviated from the particular company’s market value.
Although the violations that have been established may be considered of a minor nature when viewed separately, they are found to constitute grounds for imposing disciplinary action when viewed as a whole. Accordingly, the Disciplinary Committee orders Pareto Öhman AB to pay a fine of five hundred thousand kronor (SEK 500,000).
About the Disciplinary Committee
The role of NASDAQ OMX Stockholm’s Disciplinary Committee is to consider suspicions regarding whether Exchange Members or listed companies have breached the rules and regulations applying on the Exchange. If NASDAQ OMX Stockholm suspects that a member or a listed company has acted in breach of NASDAQ OMX Stockholm’s rules and regulations, the matter is reported to the Disciplinary Committee. NASDAQ OMX Stockholm investigates the suspicions and pursues the matter and the Disciplinary Committee issues a ruling regarding possible sanctions. The sanctions possible for listed companies are a warning, a fine or delisting. The fines that may be imposed range from one to 15 annual fees. The sanctions possible for Exchange Members are a warning, a fine or debarment. Fines paid are not included in the Exchange’s business but are attributed to a foundation supporting research in the securities market. The Disciplinary Committee's Chairman and Deputy Chairman must be lawyers with experience of serving as judges. At least two of the other members of the Committee must have in-depth insight into the workings of the securities market.
Members: Former Supreme Court Justice Johan Munck (Chairman), Supreme Court Justice Marianne Lundius (Deputy Chairman), Professor emirita Madeleine Leijonhufvud, Company Director Stefan Erneholm and Company Director Anders Oscarsson. Deputies: Former Authorized Public Accountant Bo Magnusson, Lawyer Wilhelm Lüning, Company Director Jack Junel, Ragnar Boman (MBA) and Carl Johan Högbom (MBA).
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