Failure to register as an exchange or as a broker-dealer may result in operating as an unregistered exchange in violation of Section 5 of the Exchange Act. For an unregistered exchange, the SEC is empowered to bring a civil action to obtain damages including disgorgement, civil penalty and prejudgment interest. II.
What happens if a trading platform is unregistered?
Among other reasons, the longer a trading platform operates as an unregistered exchange, the more its profits may increase, which could lead to a higher disgorgement amount resulting from any enforcement action, and that could, in turn, lead to a higher prejudgment interest figure as well.
Who qualifies as an exchange?
If an organization, association, or group of persons qualifies as an exchange, then it must either register with the SEC as an exchange or register as a broker-dealer and comply with Regulation ATS.
