Bloomberg units attempt to settle Ontario claims of unauthorized trades

Two trading platform subsidiaries of financial data and technology company Bloomberg L.P. are seeking to settle Ontario Securities Commission allegations that they operated in Canada without proper authorization and failed to provide candid, accurate and complete information to regulators.

A hearing is scheduled to take place on Friday at 10 a.m.

In a 13-page statement of allegations made public on Wednesday, the OSC accused the two “sophisticated” subsidiaries — Bloomberg Trading Facility Ltd., and Bloomberg Trading Facility B.V. — of failing to obtain permission or exemption to operate a marketplace in the province, as required by law.

The companies, neither of which has a physical presence in Ontario, are also alleged to have ultimately filed applications to the regulator seeking exemptions from the requirement to be recognized as an exchange “that contained inaccurate and incomplete information” because they “did not disclose the fact that Ontario participants had already been onboarded … (and) had already engaged in fixed income securities transactions.”

One of the subsidiaries, Bloomberg Trading Facility Ltd., is also accused of “failing to comply with the terms and conditions” attached to a subsequent interim exemptive relief order that limited the types of trading that could take place.

The trading on the platforms involved institutional investors and took place in 2017 and 2018, both before and after the Bloomberg firms were granted interim exemption orders with conditions attached, according to the statement of allegations.

“Over a 15-month period and beginning at different times … 11 of the 18 Ontario participants conducted fixed income trading on BTFL's multilateral trading facility (MTF) in a principal amount of approximately $228.5 billion USD,” the document says, adding that this represented 2.93 per cent of all fixed income trading on the platform during that time.

Over a one-year period, beginning at different times, the second corporation, Bloomberg Trading Facility BV, provided 16 institutional Ontario participants access to trade in fixed-income securities. Over that time, two of the participants conducted fixed-income trading on BV's multilateral trading facility “in a principal amount of approximately $4.4 billion USD,” which represented 1.61 per cent of all fixed income trading on BV's platform during that time, the document says.

None of the allegations involve the investors who traded fixed-income securities and none have been proven. Terms of a negotiated settlement reached Dec. 14 will not be made public unless it is approved by a panel of OSC commissioners on Friday.

A lawyer for Bloomberg declined to comment before the settlement hearing.

The OSC said its staff relies on the completeness and accuracy of information supplied by companies and individuals seeking recognition or exemptions, and their compliance with any terms and conditions imposed, “to manage risks to Ontario investors and market participants” in the public interest.

“Before foreign and domestic marketplaces are permitted to carry on business in Ontario, they must obtain authorization from the Commission to do so and their application for such authorization must provide candid, accurate and complete information,” the regulator said. “These requirements serve to protect Ontario market participants and investors and foster fair and efficient markets.”

Requirements serve to protect Ontario market participants and investors and foster fair and efficient markets.