BNP Paribas Securities
The findings stated that in October 2019, the firm migrated to a new LOPR reporting system, but the new system was not set up to receive updates on salesperson location information, and, over time, that data became outdated and inaccurate. As a result, the firm failed to identify certain intermediated transactions, and to assess whether such transactions required reporting to the LOPR, because its systems erroneously concluded that no U.S. salesperson was involved. The firm discovered this reporting issue and later implemented a fix to ensure the salesperson location database was up to date. However, due to an oversight, the firm did not report to the LOPR the open intermediated OTC options positions until March 2021.
In addition, after the migration, one of the firm’s trading systems began erroneously excluding salesperson information when passing trade information to the LOPR reporting system. The firm identified and remediated the issue. Further, as part of the migration, the firm inadvertently excluded all transactions involving non-U.S.-based funds from consideration for LOPR reporting. However, the firm intermediated some of these transactions involving non-U.S.- based funds, and they were therefore eligible to be reported if other LOPR requirements are met. The firm remediated this issue.
Moreover, a U.S. salesperson erroneously selected the wrong trader identifier when entering transactions. As a result, the firm failed to report certain intermediated transactions effected by the U.S. salesperson because the firm’s systems associated the transactions with the former foreign trader, whose initials were used as the identifier. The firm identified, selfreported, and remediated the issue.
Furthermore, one of the firm’s trading systems placed the salesperson location information in the wrong data field, and, therefore, the LOPR reporting system failed to recognize certain intermediated transactions involving large options positions. The firm remediated the formatting issue.
The findings also stated that the firm failed to establish and maintain a supervisory system, including WSPs, reasonably designed to achieve compliance with FINRA Rule 2360(b)(5). The firm’s random review of selected options transactions was not reasonably designed in that they did not ensure that a sufficient number of intermediated transactions would be reviewed for compliance with the LOPR reporting requirement. The firm remediated this issue by implementing new supervisory procedures, including WSPs, that recalculated on a daily basis the LOPR eligibility of each of the firm’s OTC options positions to confirm each position was reported properly
