OSC alleges Bloomberg subsidiaries operated without registration or exemption

The Ontario Securities Commission (OSC) is seeking a settlement with a couple of Bloomberg LP subsidiaries over allegations they violated securities rules by allowing institutional clients to trade on their unregistered trading facilities.

The OSC will hold a hearing on Dec. 18 to consider a settlement agreement with the firms. The terms of the settlement will be revealed only if the agreement is approved.

In a notice setting out its allegations, the OSC alleged that the two firms — U.K.-based Bloomberg Trading Facility Ltd. (BTFL) and Netherlands-based Bloomberg Trading Facility B.V. — operated a marketplace without registration, or an exemption, by providing institutional investors in Ontario access to trade fixed-income securities. The allegations haven’t been proven.

According to the allegations, BTFL provided 18 institutional investors with trading access over a 15-month period, and 11 of those investors traded approximately US$228.5-billion worth of securities on its multilateral trading facility (MTF) over the period, including US$57 billion before an exemption was granted. BV provided trading access to 16 institutional investors before receiving an exemption (an exemption has yet to be granted).

“Before the respondents had sought or obtained recognition or an exemption order from the commission, they carried on business as exchanges by failing to prevent, or otherwise permitting, fixed-income trading by Ontario participants on their MTFs,” the regulator said in the allegations.

The OSC also alleged that neither firm disclosed that they’d already allowed Ontario investors to trade before obtaining exemptions.

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