Two different "disruptive trading" cases had disciplinary notices issued today - the notices are here and here. The notices speak to large layered orders on one side of the market with resulting trades from smaller resting orders on the other side of the market and subsequent cancellation of the layered orders. The fines was $45K in one case and $65K with a $41K+ disgorgement in the other. This is a scenario we have covered on this blog a number of times before.
What DCM wants to reflect on this time is the length of time these cases may have consumed. In one case, the trades were done in November 2017; in the other, January, 2018. The settlement hearing in both cases was August 2019. Even if it took the exchange 6 months to start the investigation that is still over 12 months for this process. That is twelve months of internal, and probably external, legal effort with its associated cost. Twelve months of disruption on the desk with the need for traders to respond to questions. Twelve month of staff going through order level data recreation and analysis.
This process costs soft dollars and likely large quantity hard dollars for outside counsel, It reduces the efficiency of your trading operations.
That is the real impact of trading oversight failures - the long, steady impact on your business. Consider that when you are considering the review of your compliance program.