BATS DZX EXCHANGE, INC.

u;:TTE R OF ACCF.PTANC I~, WAIVER AN D CONS~NT

20140407387-02
NO.~~~~~~~

TO : Bats BZX E:xchangc, Inc.

c/u Dcpar1111cnt of' Market Regu lation
financial lnJustry Regulatory Authorit y ("FINRJ\.. )

l~ E: Bluefin Tradin g. LLC. Respondent

Orokcr-Dea lcr
CRD No. 11 3892

Pursuant to Ru ic 8.3 o l'the Ru les o r Bats 13ZX Exchange. Inc. ("'BZX .. ). llluc lin Trading. LLC
(the .. fim1 '') submits this Letter of Acceptance. Waive r and Consent("/\ WC") for the purpose of
proposing a settlement of the alleged rule violations described below. This A WC is submitted on
the cond ition that. if accepted, BZX will not br ing any future actions against the firm alleging
vio lations hased o n the same factua l findings descri bed herein.

I.

ACCEPTANCE AND CONSENT

t\. The firm hereby accepts and consents.'' ithout admitting or denying the find ings. and
solely for the purposes of this proceeding and any other pr01.:eeding brought hy or on
behalf o f OZX. or to which BZX is a party. prior to a hearing and wi thout an ::idjudication
of any issue o r law or fact. to the entry or the fo llowing find in gs hy 11ZX:

BAC KGROUND

The firm became a member of 13ZX 0 11 /\ugli s! 3, 2009, and its registrat ion remains in
effect. The lirm docs not have any relevant di sc iplinary history.

SUM t\'IARY

I. FINRA 's Department of i\farki:!t Regulation (the "Stafr), on behalf or 11ZX nnd various
other securities c:xchunges, condm:tcd u review uf the firm' s compliance with Securiti es
anu l::'.:x1,:ha11gc Commission ("SEC'') Ruk 15d-5. in addition to U/.X Rules 3. I and 5.1
during the period between September 2.L 20 11 and December 31, 2015 (the " Review
Period").

2. As a result of its review. the Staff determined that the firm: (i) foiled to implement and
maintain an adequate system of ri sk management controls and supervisory procedures.
inc luding pre-order controls and a system of follow-up and rev iew n:asnnably designed to
prevent the transmission of excessive orders or quotations: and (ii) fni led to adopt nnd

STAR No. 20 140407387 (Jl'l I)

 implement a supervisory system reasonab ly deigned to address compliance with SEC
Ruic I5d-5.

Applicable Rules

3. On Novemhcr 3. 20 I 0. th~ SEC adopted SEC Ruic I 5c3-5. SEC Ruic I 5c3-5 requires.
among other things. that a broker-dealer with market access establish risk management
controls anJ supervisory procedures that arc reasonably designed to limit the financial
exposure ul' thc broker-dea ler and ensure compliance with all reguluiory req uirements
applicabk tu market access. Among other requirements. the controls nnd supervisory
procedures must be reasonably designed to: (i) prevent the entry of erroneous orders. by
rejecting orders that exceed appropriate price or size parameters, or that indicate
duplicative orders: and (ii) prevent the entry or orders that do not co111pl) with all
1

regulatory requirements that must he sntisfic<l on n pre-order entry hnsis. The controls and
supervi sory procedures mandated by SEC Rule I 5d-5 must be under the direct and
exclusive conln>I ul' the brokcr-deakr. The cnmpliance date for the relevant provisions o f
SEC Ruic 151.:3 -5 was July 14. 20 I I.

4. SEC Ruic I5c3-5(b) requires brokers and dealers with market access tu ·'establish.
document, and maintain a system of risk management controls and supervisory
procedures reasonably designed to manage the financial, regulatory. and other risks of
thi s business activity."

5. SEC Rule I Sc3-5(c) requires, among other things. that the ri sk management control s and
supervisory procedures be reasonably designed to prevent the cnlry of erroneous or
duplicative orders and ensure compliam:e with all pre-trade regulatory requirements.

6. BZX Ruic 3. l requires that u member. in the conduct ol' its business. observe high
standard s of commercial honor and just and equitable principks of trade.

7. BZX Rule 5. 1 requires. in pertinent part. that a member establi sh maintai n, and enforce
written procedures which will ennble it to supervise properly the activities of the firm and
lo assun: its compliance with applicabk securities laws. rules and regulations.

FACTS AND VIOLATIVE CONDUCT

8. Between September 23. 20 11 and February 25. 2013. on approximately 300 occasions
during the Review Period, the fi rm sent an cxressive number of messages over a short
period of time by entering and amending orders on 13ZX.

9. Within the above occasions, the fi rm subm itted between 12 and 48 new orders in one-
second period s. but amended those orders between 983 and I. 710 times in the one-second
periods.

I0. On at least one of the occas ions. the cxcessivc rm:ssaging was lite unintended
consequence or a so ftware mal funct ion.

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 11 . Duri ng the Review Period, the firm fa iled to have a tool in place to monitor its message
traflic on a per symbol basis. Additionally, the fi rm fai led lo implement a control to
detect and limit the number of order umen<lments it could make per second unti l
September I, 20 I 5.

12. The conduct described in paragraphs 8 through 11 constitutes a violation of SEC Ruic
I5d-5 and R7,X Rules 3. 1 and 5. 1

OTHER FACTORS

8. The fi rm also consents to the imposition or the following sanctions:

I. A censure; and
2. 1\ 11 aggregate fine of $40,000, of which $20,000 shall be paid to BZX. 1
3. Acceptance of this A WC is condit ioned upon acceptance or a simil ar
settlement agreement in a related matter between the firm and NYSE Arca,
Inc. The aggregute settlement amount across all markets is $40,000.

The fi rm agrees to pay the monetary sanction(s) upon notice that this A WC has been
m:ccpted and that such payment(s) arc due and pnyabk. It has submitted an Election of
Payment fo rm show ing the method by which it proposes lo pay the fine imposed.

The lirrn specificall y and vo luntarily waives any right to claim that it is unable to pay,
now or ai any time hereafter, the monetary sanction(s) imposed in this mallcr.

The sanctions imposed herein shall be effective on a date set by BZX .

IT.

W AI VER OF PROCEDURAL IUGHTS

The firm specifically and voluntarily waives the fo llowi ng rights granted under BZX Rules :

A. To have a Statement of Charges issued specifyi ng the al legations against the firm;

R. To be not ilicd orthe Statement of Charges and have the opportunity to answer the
allegations in writing:

C. To defend against the allegations in a disciplinary hearing before a I !caring Pa nel, to

have a written record of the hearing made and to have a written decision issued; and

D. To appea l any such decision to the Appeals Committee of the 13ZX's Board of
Directors and then to the U.S. ScCLll'ilics and Exchange Commission and a U.S.
Court of Appea ls. ·

1
The lmlanc<· of the sanction shall be paid to NYSE Arca Equ ities. Inc.

3
Further, the firm spec ifically and voluntarily waives any right lo 1.:lairn bias or prejudgment of the
Chief Regulatory Otfa:cr ("CRO"). in connection with her partkipation in di sc uss ions regarding
the tcrm s und conditions or this 1\ WC. or other consideration or this A WC. including acceptance
or rejection of this A WC.

The firm further specilicall y and voluntaril y waives any right to claim that a person violated the
ex pa rte pr0hibiti ons or l3/X Rule 8.16, in connect ion with such person's or body' s participation
in di scuss ions regarding the terms and conditions or thi s A WC. or other.consideration of this
A WC. inc hiding its acceptance or rejection. ·

Jll.

OTHER MATTERS

The lirrn understa nd s that :

I\. Submission of this AWC is voluntary and will not reso lve this matter unless and
until it has been reviewed um! accepted by the CRO. pursuant to 13ZX Rule 8.3;

13. If this AWC is not accepted. its submission will not be used as evidence to prove
any ot'thc allegations aga inst the firm: and

C. If acccrtcd:

I. this ;\WC wi II become part of the firm's permanent disciplinary record

and may be considered in any future actions brought by 13ZX or any other
regulntor against the firm :

2. this J\ \VC will be published on a website maintained by UZX in

accordance with E1ZX Ruic 8.11, Interpretations and / 10/ic.: ies .OJ; and

3. The firm may nut take any a<.:tion or make or permit to he made any publil:
statement. in<.:luding in regulatory Ii lings or otherwise, denying, directly or
in<lirc1.:tly, an y finding in this A WC or crea te the impression that the A W C
is without factual basis. The t.im1_1.11ay not take any position in any
proceeding brought by or Oil behalf or 13ZX. or to which 13ZX is a party.
that is inconsistent with nny part of this A 'vVC. Nothing in this provision
affects the firm' s: (i) testimonial obligations; or (ii) right to take legal or
ractual positions in litigati on or other legal proceedings in which l3ZX is
not a pnrty.

D. The tinn may attach a Corn~ctivc Action Statement to this J\ WC that is a

statement of demonstrable corrective steps taken to prevent f'uture misconduct.
The firm understands that it may not deny the charges or make any statement that
is inconsistent with the A WC in this Statement. This Statement docs not
constitute ltll:tual or legal lindings by 13ZX. nor Joes it rellcct the views or BZX
or its staff.

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The undersigned, 011 behalf of the firm, certillcs that a rcrson duly m1thori zed to act on its behalf
has read and understands nil of the provisions of this A WC and has been given a full opportunity
to usk questions about it ; thut it has agreed to the/\ WCs provisions voluntarily: nnd that no
offer, threat, inducement, or promise of nny kind, other than the tenns set forth herein and the
prospect of avoiding the issuance of a Complaint. has been made to induce lht! firm to submit it.

I
11 n /I G Rlucfin Trading, I.LC
Date Respondent

13y: :13=- -

Name: C <:: ,v ;V; ) /) ~ z. Ai.: /1.-c Vi L !-/

Reviewed by:

Counsel for Respondent

f irrn Name
/\ddrcss
City/State/Zip
Phone Number

anr
Chief Regulatory Orticcr
13ats l3ZX Exchange. Inc.

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 ELECTION OF PAYMENT FORM

The firm intends l<) pay the fin e proposed in the nttached Letter ot' Ac.:L·eplance. Waiver
and Consent by 1he following method (chcc.:k one) :

~ 1\ firm check or bank check for the full amount; or

0 Wire tran sl'cr.

Respectfully submitted,

Date Respondent
IJlucfin Trading. LLC

_,,.,__
By: ---~'-- · _c. _ __

STAR No. 20140407:187 (JPll)