The Securities and Exchange Commission has accused the Nasdaq Stock Market of observing suspect trading by MarketXT and failing to report it to regulators.
The regulator said the National Association of Securities Dealers and the Nasdaq, which neither admitted nor denied the findings, have strengthened their regulatory procedures.
The SEC said Wednesday that the electronic trading platform MarketXT developed trading programs to take advantage of market-data rebates available from Nasdaq, according to a report Thursday by MarketWatch.
The programs executed rapid-fire trading in three exchange-traded funds, the Nasdaq-100 Index Tracking Stock, Spider Trust Series 1, and Diamonds Trust Series 1, the SEC said.
"MarketXT was...having serious financial difficulties and became significantly in arrears in paying fees to Nasdaq," the SEC said.
SEC enforcement chief Stephen Cutler suggested in a statement that Nasdaq was under pressure to see MarketXT succeed.
