Not so fast, high-frequency traders.
The Securities and Exchange Commission, watching hft firms more carefully these days in the wake of market disturbances, has fined New York-based HFT firm Latour Trading for violating the regulator’s capital requirement rules.
According to a filing by the SEC and posted on its website, Latour violated its capital requirements between January 2010 and December 2011. On 19 of 24 reporting days during the aforementioned period, the SEC stated, the firm miscalculated and failed to maintain its capital reserves by millions of dollars. The capital deficiencies ranged from $2 million to as much as $28 million due to its haircut calculations.
On one occasion, Latour Trading failed to meet its capital requirement due to erroneous haircut calculations by $40 million.
The SEC also found fault with Latour’s chief operating officer Nicholas Niquet, who used on numerous occasions a risk based approach to determining its haircuts. This overstated the amount of net income the firm held.
The SEC has censured Latour and fined it $16 million dollars. Niquet was personally fined $150,000.
The firm corrected its haircut methodology in 2012.
Latour Trading has been a registered broker-dealer with the SEC since July 2009.