NASDAQ PHLX LLCLETTER OF ACCEPTANCE, WAIVER AND CONSENT
NO. 2019.10.0065
TO:Nasdaq PHLX LLC
Phlx Enforcement Department

RE:Instinet, LLC
Member Firm
CRD No. 7897

Pursuant to Rule 9216 of the Nasdaq PHLX LLC (“Phlx”) Code of Procedure, Instinet, LLC(the “Firm,” “Instinet,” or “Respondent”) submits this Letter of Acceptance, Waiver andConsent (“AWC”) for the purpose of proposing a settlement of the alleged rule violations
described below. This AWC is submitted on the condition that, if accepted, Phlx will not bringany future actions against the Respondent alleging violations based on the same factual findings
described herein.
I.
ACCEPTANCE AND CONSENTA.

The Firm hereby accepts and consents, without admitting or denying the findings, andsolely for the purposes of this proceeding and any other proceeding brought by or on
behalf of Phlx, or to which Phlx is a party, prior to a hearing and without anadjudication of any issue of law or fact, to the entry of the following findings by Phlx:
BACKGROUND AND RELEVANT DISCIPLINARY HISTORYThe Firm became a member of Phlx on April 25, 1979, and its registration remains ineffect. The Firm has no relevant disciplinary history.
SUMMARY
During the period of July 1, 2019 through December 31, 2019, March 19, 2021, and April
1, 2021 (collectively, the “Review Period”), the Firm violated Phlx Rules 1087(b)(1)(K),707, and 748(h) for conduct occurring prior to February 3, 2020, and Phlx Options 3,Section 13(b)(1)(K), General 9, Section 1(c), and General 9, Section 20(h) for conduct
occurring on or after February 3, 2020, as set forth below.
FACTS AND VIOLATIVE CONDUCTPIXL Auction Violations
1. Price Improvement XL (PIXL) is the Phlx electronic price improvement mechanism
whereby an initiating member submits a two-sided order into an auction processsoliciting price improvement. It permits a Phlx member to electronically submit forexecution an order it represents as agent on behalf of a Public Customer, broker-dealer,or any other entity against principal interest or against certain other orders it represents
as agent provided it submits the PIXL Order for electronic execution into the PIXLAuction (“Auction”) pursuant to Rule 1087.
2. Phlx Rule 1087(b)(1)(K) permitted multiple PIXL Auction Notification (“PAN”)
1responses from the same member submitted during the Auction; however, multipleorders at a particular price point submitted by a member in response to a PAN may notexceed, in the aggregate, the size of the PIXL order. 1
3. Phlx Rule 707 prohibited a member firm from engaging in conduct inconsistent withjust and equitable principles of trade. 2
4. A violation of Phlx Rule 1087(b)(1)(K) is deemed conduct inconsistent with just andequitable principles of trade and considered a violation of Rule 707. 3
5. During the Review Period, the Firm, in 1,065 Auctions, inadvertently submitted morethan one order in response to a PAN at a particular price point that exceeded, in theaggregate, the size of the PIXL Order. As a result, the Firm entered orders for 8,952
more contracts than it should have, resulting in 1,834 executions.
6. The conduct described in paragraph five constitutes a violation of Phlx Rules
1087(b)(1)(K) and 707 for conduct occurring prior to February 3, 2020, and Phlx
Options 3, Section 13(b)(1)(K) and General 9, Section 1(c) for conduct occurring on orafter February 3, 2020.
Supervision
7. Phlx Rule 748(h) required member organizations to establish, maintain and enforce
written supervisory procedures (“WSPs”), and a system of supervision for applying suchprocedures, that are reasonably designed to supervise the types of businesses andactivities in which they and their associated persons engage in order to achievecompliance with, and to prevent and detect violations of, applicable securities laws andregulations, including the By-Laws and Rules of Phlx. 4
8. During the Review Period, while the Firm had WSPs in place that addressed therequirements of Phlx Rule 1087, the WSPs were not reasonably designed to supervise
the type of businesses and activities in which the Firm and its associated persons wereengaged. Specifically, the Firm’s WSPs were not tailored to review responder
participation in the Auction process.
9. During the Review Period, the Firm did not establish, maintain and enforce any systemof supervision to detect and prevent the submission of multiple PAN responses at thesame price that in the aggregate exceeded the size of the PIXL order.

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As of February 3, 2020, Phlx Rule 1087(b)(1)(K) was renumbered and relocated to Options 3, Section
13(b)(1)(K) in the Phlx rulebook. See Securities Exchange Act Release No. 88213 (Feb. 14, 2020), 85 FR9859 (Feb. 20, 2020) (SR-Phlx-2020-03).

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As of February 3, 2020, Phlx Rule 707 was renumbered and relocated to General 9, Section 1(c) in the Phlx
rulebook. See Securities Exchange Act Release No. 88213 (Feb. 14, 2020), 85 FR 9859 (Feb. 20, 2020)(SR-Phlx-2020-03); Securities Exchange Act Release No. 91058 (Feb. 4, 2021), 86 FR 8966 (Feb. 10,2021) (SR-Phlx-2021-04).

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See Phlx Options 3, Section 13(d).

4As of February 3, 2020, Phlx Rule 748(h) was renumbered and relocated to General 9, Section 20(h) in thePhlx rulebook. See Securities Exchange Act Release No. 88213 (Feb. 14, 2020), 85 FR 9859 (Feb. 20,2020) (SR-Phlx-2020-03).

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10. The conduct described in paragraphs eight and nine constitutes a violation of Phlx Rules
748(h) and 707 for conduct occurring prior to February 3, 2020, and General 9, Section
20(h) and General 9, Section 1(c) for conduct occurring on or after February 3, 2020.
11. Phlx acknowledges that the Firm has taken corrective actions to address the matter set
forth herein.
B.

The Firm also consents to the imposition of the following sanctions:
1. A censure and a fine in the amount of $14,000.
Respondent agrees to pay the monetary sanction(s) in accordance with its
executed Election of Payment Form.
Respondent specifically and voluntarily waives any right to claim that it is unable to pay,
now or at any time hereafter, the monetary sanction(s) imposed in this matter.
The sanctions imposed herein shall be effective on a date set by Phlx Enforcement
Department staff.
II.
WAIVER OF PROCEDURAL RIGHTS

Respondent specifically and voluntarily waives the following rights granted under Phlx’s Codeof Procedure:A.

To have a Formal Complaint issued specifying the allegations against the Firm;

B.

To be notified of the Formal Complaint and have the opportunity to answer theallegations in writing;C.

To defend against the allegations in a disciplinary hearing before a hearing panel,to have a written record of the hearing made and to have a written decision
issued; andD.

To appeal any such decision to the Phlx Review Council and then to the U.S.
Securities and Exchange Commission and a U.S. Court of Appeals.

Further, Respondent specifically and voluntarily waives any right to claim bias or prejudgmentof the Chief Regulatory Officer, the Phlx Review Council, or any member of the Phlx ReviewCouncil, in connection with such person’s or body’s participation in discussions regarding theterms and conditions of this AWC, or other consideration of this AWC, including acceptance orrejection of this AWC.
Respondent further specifically and voluntarily waives any right to claim that a person
violated the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions ofRule 9144, in connection with such person’s or body’s participation in discussions regarding
the terms and conditions of this AWC, or other consideration of this AWC, including its
acceptance or rejection.

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III.
OTHER MATTERS
Respondent understands that:A.

Submission of this AWC is voluntary and will not resolve this matter unless anduntil it has been reviewed and accepted by the Phlx Enforcement Department
and the Phlx Review Council, the Review Subcommittee, or the Office ofDisciplinary Affairs (“ODA”), pursuant to Phlx Rule 9216;

B.

If this AWC is not accepted, its submission will not be used as evidence toprove any of the allegations against the Respondent; andC.

If accepted:

D.

1.

This AWC will become part of the Respondent’s permanent disciplinary
record and may be considered in any future actions brought by Phlx or
any other regulator against the Respondent;

2.

Phlx may release this AWC or make a public announcement concerning
this agreement and the subject matter thereof in accordance with Phlx
Rule 8310 and IM-8310-3; and3.

Respondent may not take any action or make or permit to be made any
public statement, including in regulatory filings or otherwise, denying,directly or indirectly, any finding in this AWC or create the impressionthat the AWC is without factual basis. Respondent may not take anyposition in any proceeding brought by or on behalf of Phlx, or to which
Phlx is a party, that is inconsistent with any part of this AWC. Nothing inthis provision affects the Respondent’s right to take legal or factual
positions in litigation or other legal proceedings in which Phlx is not aparty.

Respondent may attach a Corrective Action Statement to this AWC that is astatement of demonstrable corrective steps taken to prevent future misconduct.
Respondent understands that it may not deny the charges or make any
statement that is inconsistent with the AWC in this Statement. This Statement
does not constitute factual or legal findings by Phlx, nor does it reflect theviews of Phlx or its staff.

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The undersigned, on behalf of the Firm, certifies that a person duly authorized to act on its
behalf has read and understands all of the provisions of this AWC and has been given a fullopportunity to ask questions about it; that the Firm has agreed to the AWC’s provisions
voluntarily; and that no offer, threat, inducement, or promise of any kind, other than theterms set forth herein and the prospect of avoiding the issuance of a Complaint, has been
made to induce the Firm to submit it.
Instinet, LLC
Respondent
By: __________________________
Print Name: ___________________David Sieradzki
Title: _________________________
Associate General Counsel

August 9, 2021______________________
Date

Accepted by Phlx:
August 9, 2021______________________
Date

Signed on behalf of the
Director of ODA, by delegated authority__________________________________
Muyiwa Odeniyide
Enforcement CounselPhlx Enforcement Department

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