Cboe Slaps $170K Fine on Hilltop Securities for Mishandling Options Reporting

Texas-based broker Hilltop Securities fined $170,000 by Cboe for options reporting violations spanning over 131,000 positions and 1.6 million inaccurate account numbers from 2020-2023.

Key Insights

  • Hilltop Securities fined $170,000 by Cboe Exchange for widespread reporting failures related to listed options positions.
  • The firm failed to properly report over 131,000 positions and inaccurately reported 1.6 million account numbers to the LOPR system from 2020-2023.
  • Lapses were due to coding errors, lack of procedures for identifying acting-in-concert groups, and inadequate supervision of LOPR reporting.

NEW YORK (MarketsXplora) – Hilltop Securities Inc has agreed to pay $170,000 to settle charges by Cboe Exchange, Inc related to widespread failures in reporting listed options positions and other data, the regulator said on Monday.

The Texas-based firm admitted to violating exchange rules by failing to properly report options positions and associated information on more than 131,000 occasions to the Large Options Position Report (LOPR) system from June 2020 to October 2022, according to a Cboe disciplinary notice.

Hilltop also inaccurately reported account numbers for all 1.6 million records submitted to the LOPR during that period after a change in how it formatted account numbers, the order found.

The lapses stemmed from coding errors by a third-party vendor used for LOPR reporting as well as shortcomings in how the firm collected information on related accounts from its introducing brokers to identify potential acting-in-concert groups, Cboe said.

On over 58,000 occasions, Hilltop reported positions without identifiers for acting-in-concert accounts, while failing entirely to report around 500 other positions as being part of such groups, the order stated.

Cboe also faulted Hilltop for failing to maintain adequate supervisory systems and procedures relating to its LOPR reporting responsibilities, including no process to review data submitted by its introducing brokers. Training of compliance staff on use of the reporting system was also lacking.

The $170,000 fine reflected Hilltop’s prior disciplinary history, which was not detailed in the order.

A Hilltop spokesperson declined to comment on the settlement.

The LOPR system is used by exchanges to monitor large positions that could influence options markets. Acting-in-concert provisions require the aggregation and reporting of positions held by accounts with coordinated trading strategies.

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