A panel of the Ontario Securities Commission (OSC) has approved a settlement agreement under which two Bloomberg L.P. subsidiaries – the Bloomberg Trading Facility Limited (BTFL) of England and Wales and the Bloomberg Trading Facility B.V. (BV) of the Netherlands – will pay an administrative penalty of $2,506,011.80 and disgorge $663,305.20 in commissions that they earned while operating marketplaces in Ontario without authorization.
The firms also admit to filing applications with the OSC that contained incomplete and inaccurate information.
In settling the matter, both firms admit that they carried on business as exchanges by providing institutional investors in Ontario with access to trade fixed income securities and swaps before seeking or obtaining any recognition or exemption orders from the commission. The firms also admit the applications they filed with the commission requesting exemptive relief from the requirement to be recognised as an exchange, contained inaccurate information, as neither disclosed the fact that Ontario users had already been onboarded and engaged in trading.
“This settlement agreement serves to emphasize that domestic and foreign marketplaces have the obligation to take all appropriate steps to comply with Ontario securities law,” the OSC writes in its settlement agreement. “Before foreign and domestic marketplaces are permitted to carry on business in Ontario, they must obtain authorization from the commission to do so and their application for such authorization must provide candid, accurate and complete information.”
In this case, they add that the two sophisticated corporations failed to comply with Ontario securities laws by operating a marketplace without receiving recognition or an exemption. They also failed to comply with securities laws when they filed applications that contained inaccurate and incomplete information that was future-looking, conveying that there would be Ontario participants at a future time, when BTFL and BV had already provided institutional investors in Ontario with access to trade in fixed income securities.
The OSC says both firm’s cooperation in the matter has been exemplary. They add that both respondents believed, based on legal advice, that they were not acting contrary to Ontario law.
In addition to paying the administrative penalty and disgorging commissions earned, the firms will also conduct internal reviews of their compliance practices and procedures and must submit an internal review report to OSC staff describing all changes made, or which they propose to make, to their compliance policies and procedures before the end of March 2021.
