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Timber Hill Europe AG (“Timber Hill”), a member of NASDAQ OMX Stockholm AB (“the Exchange”), has breached the Exchange's rules and regulations by automatically issuing sell orders with terms that deviated from the current market value. Accordingly, the Exchange's Disciplinary Committee has ruled that Timber Hill must pay a fine of four hundred thousand Swedish Kronor, SEK 400,000.
Timber Hill has undertaken to comply with the Exchange's current rules as long as it remains a member of the Exchange. The Exchange's rules stipulate that orders placed in the order book shall reflect the current market value of the instrument concerned and constitute an actual order and trade. The term “current market value” pertains to prices that, when collectively assessed, reflect the current price based on such factors as price fluctuations for that instrument during the concerned and previous trading days, the instrument's volatility and general price fluctuations in relation to comparable instruments.
In accordance with the rules, the member bears the same liability for orders placed via automatic order routing as for orders placed in any other manner in the trading system. Members shall also establish appropriate technical and administrative arrangements in order to ensure that orders placed via automatic order routing do not violate the rules.
On July 22, 2009, Timber Hill placed an automatic sell order in the Exchange's trading system. The price limit for this order was repeatedly updated to match the buy order in the order book until no buy orders remained. The final trades were executed at prices that clearly deviated from the prices at which the share in question was trading prior to and following these trades. Timber Hill subsequently contacted the Exchange to attempt to cancel the trades executed at the lowest prices, but this did not occur within the timeframe stipulated by the rules. By issuing these sell orders, without examining their price limits, Timber Hill failed in its responsibility to ensure that automatically placed orders are in compliance with the Exchange's rules.
Accordingly, it has been demonstrated that Timber Hill breached the Exchange's rules. The Disciplinary Committee has also taken into account that Timber Hill has breached the rules in a similar manner on previous occasions. Due to this, the Disciplinarily Committee cannot find the breach minor or excusable. Timber Hill is thus unable to avoid a disciplinary sanction.
The Disciplinary Committee fines Timber Hill Europe AG four hundred thousand Swedish kronor (SEK 400,000).
