The merger between Lenexa-based stock exchange Bats Global Markets and its New Jersey rival may come with a large federal fine, according to a published report.
Bats’ board of directors have agreed to a $12 million fine to settle a Securities and Exchange Commission investigation of Direct Edge, the Wall Street Journal reported.
Bats and Direct Edge, the third and fourth largest U.S. stock exchanges, agreed in August 2013 to combine. Their merger early this year turned Bats into a rival roughly the size of the New York Stock Exchange and the Nasdaq.
A company official declined Friday to comment on the report.
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In the article, the newspaper said the electronic stock exchange Direct Edge had come under scrutiny prior to the merger for various trading order types, complex variations of simple buy and sell orders. It cited people familiar with the matter without identifying its sources.
The SEC investigation, the report said, focused on whether Direct Edge provided accurate descriptions of how the complex order types worked and whether some trading clients had more information about them than other traders did.
An official announcement could come within weeks, the newspaper said.
Bats, which started as an electronic trading center in Kansas City in 2005, handles about 20 percent of trading in U.S. stocks. It also operates markets overseas.