Continuing from our last post looking at recent SEC enforcement actions, the US regulator has recently fined ICE Data Pricing & Reference Pricing ("PRD", which was formerly Interactive Data) $8 million. Per the SEC, for 46,000 fixed income securities in the ICE database, the firm did not deliver a pricing feed based on "evaluated prices" (which consider factors such as benchmark yields, reported trades, bids, offers and two-way markets) - but rather gave users single broker quotes. Single broker quotes are, of course, precisely what investors want to avoid through use of a pricing feed.
In this case, the SEC makes a number of points:
In fairness, the 46,000 securities which were single broker quoted were a small minority of the more than 2 million lines in Interactive Data's overall pricing database. But, nonetheless, single broker quotes would suggest that these names were securities with thin markets and hence elevated pricing risk - which should, we assume, have been subject to higher degrees of care and attention. The SEC's order provides a revealing look behind the curtain as to whether checks and controls are always effective in the pricing industry.
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