NASDAQ PHLX LLCLETTER OF ACCEPTANCE, WAIVER AND CONSENT
NO. 2015047551601
TO:Nasdaq PHLX LLC
c/o Department of Enforcement
Financial Industry Regulatory Authority ("FINRA")RE:UBS Securities LLC, Respondent
Member Firm
CRD No. 7654

Pursuant to Rule 9216 of Nasdaq PHLX LLC ("PHLX") Code of Procedure, UBS Securities
LLC (the "Firm","UBS" 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 CONSENT
A.

Respondent 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 an
adjudication of any issue of law or fact, to the entry of the following findings by PHLX:BACKGROUND AND RELEVANT DISCIPLINARY ISTORYUBS has been registered with PHLX since May 15, 1978 and FINRA since August 17,
1978. Its registrations remain in effect. The Firm is headquartered in New York, New
York, and is a -wholly owned subsidiary of UBS AG, a publically-owned Swiss banking
company. The Firm employs approximately 1,900 registered persons operating out of 20
branch office locations, and provides investment banking, research, and sales and trading
services mainly to corporate and institutional clients.
UBS has no relevant disciplinary history.

STAR No. 20150475516 (JPH)SUMMARY
Between October 2015 and December 2018 (the "Review Period"), UBS manuallyhandled thousands of options orders that it received from institutional customers. During
the Review Period, the Finn failed to provide for a reasonable supervisory system toachieve compliance with its best execution obligations when manually executing and/orfacilitating options orders. UBS also failed to establish, maintain, and enforce written
supervisory procedures ("WSPs") that were reasonably designed to prevent and detectviolations of its best execution obligations. As a result of the foregoing conduct, the Firm
violated PHLX Rules 707 and 748.
FACTS AND VIOLATIVE CONDUCT
1. PHLX Rule 764 requires members to use reasonable diligence to ascertain the best
market for a security when buying or selling for a customer so that the resultant price tothe customer is as favorable as possible under prevailing market conditions.
2. PHLX Rule 748(b) requires member organizations to provide for appropriate supervisory
control of the organization and compliance with securities laws and regulations, including
PHLX's By-Laws and Rules. Member organizations are required to provide forappropriate written procedures of supervision and control, and to establish a separate
system of follow-up and review to determine that the delegated authority andresponsibility is being properly exercised.
3. PHLX Rule 748(h) requires member organizations to establish, maintain, and enforce
WSPs, and a system for applying such procedures, reasonably designed to prevent anddetect violations of securities laws and regulations, including PHLX's By-Laws andRules.
4. PHLX Rule 707 states that a member, member organization, or person associated with oremployed by a member or member organization shall not engage in conduct inconsistent
with just and equitable principles of trade.
5. During the Review Period, the Firm had in place three sets of procedures that described
the Firm's obligations to seek best execution for its customers' equities and options
orders. These procedures established best execution reviews of orders that the Firmrouted through its smart order routers. However, the Finn's supervisory system,
including its WSPs, did not establish a review of options orders that were manuallyhandled and executed by the Firm's traders.
6. In each year during the Review Period, UBS manually handled and executed thousandsof options orders. Additionally, the Firm facilitated thousands of options orders eachyear that it manually executed where it both executed an options order as agent for aclient and also bought/sold the other side of the order in a proprietary capacity. However,the Firm did not review these manually executed and/or facilitated orders to ensure that
Respondent fulfilled its obligations to provide best execution to its clients' orders as set
forth in PHLX Rule 764.

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7. As a result of the above, Respondent's WPSs and its supervisory system for reviewing
manually executed and/or facilitated options orders were not reasonably designed toachieve compliance with PHLX Rule 764. Accordingly, Respondent violated PHLX
Rules 707 and 748.
B.

Respondent also consents to the imposition of the following sanctions:
1. A censure; and2. A fine in the amount of $50,000.
Respondent agrees to pay the monetary sanction(s) in accordance with its executedElection 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 FINRA 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 Exchange Review Council and then tothe 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 Exchange Review Council, or any member of thePHLX Exchange Review Council, in connection with such person's or body's participation indiscussions regarding the terms and conditions of this AWC, or other consideration of this AWC,including acceptance or rejection 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 of Rule 9144,
in connection with such person's or body's participation in discussions regarding the terms andconditions of this AWC, or other consideration of this AWC, including its acceptance orrejection.

3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 FINRA's Department of Enforcement
and the PHLX Exchange Review Council, the Review Subcommittee, or theOffice of Disciplinary Affairs ("ODA"), pursuant to PHLX Rule 9216;

B.

If this AWC is not accepted, its submission will not be used as evidence to prove
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 any
position 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
in this provision affects the Respondent's right to take legal or factual
positions in litigation or other legal proceedings in which PHLX is not aPAY'.

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 statementthat is inconsistent with the AWC in this Statement. This Statement does notconstitute factual or legal findings by PHLX, nor does it reflect the views ofPHLX 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 full opportunity
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 the terms set forth herein and theprospect of avoiding the issuance of a Complaint, has been made to induce the Firm to submit it.
UBS Securities LLC
Responderk/212/qt

wai u_By:DatePrint Name: .1) • ekrqd-0?6,-t ktv-Title: )Ce.c.u-it'vt b;s(y.,10,-- 1-1Zesu Ltivj
Reviewed by:

Christian T emnitz
Counsel for espondent
Katten Muchin Rosenman
525 West Monroe StreetChicago, IL 60661-3693
Accepted by PHLX:

D toSigned on behalf of theDirector of ODA, by delegated authorityof/o P. Hewson
P cipal Counsel
Department of EnforcementSigned on behalf of PIILX, by delegatedauthority from the Director of ODA

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ELECTION OF PAYMENT FORM
The Firm intends to pay the fine proposed in the attached Letter of Acceptance, Waiver andConsent by the following method (check one):LI

A Firm Check or bank check for the full amount
Wire transfer
Respectfully submitted,

Respondent
UBS Securities LLC
12-0/q
Date

By:
Name:

• tkriliD pTitle: EXtock0.-c

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