A unit of Deutsche Bank AG agreed to pay a $2 million penalty to an industry-backed regulator over allegations it failed to ensure that its customers received the best prices for securities orders. The Financial Industry Regulatory Authority Inc. said that from January 2014 through May 2019, the firm owned an alternative trading system known as SuperX. During that time the firm routed customer orders through SuperX before sending them to any other exchange. Customers could opt out of the strategy. “The firm failed to consider alternate routing arrangements even though, according to the firm’s own ranking model, other dark pools consistently ranked higher than SuperX for execution quality,” the settlement states.
The brokerage, which didn’t admit or deny the allegations, failed to change the arrangement despite knowing it resulted in delays and lower order fill rates, the regulator said. The firm was accused of violating the so-called best execution rule, which requires brokers to find the most favorable terms for their customers. Companies must also periodically review the quality of their trade execution by looking at factors such as speed, order size and transactions costs. The firm also failed to disclose to investors material information about its trading systems, the regulator said. Deutsche Bank closed SuperX in September as part of its exit from U.S. equity sales and trading, according to Finra.
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