NYSE ARCA, INC.

NYSE REGULATION,

Complainant, FINRA Proceeding No. 20150442333

v.

CHIMERA SECURITIES, LLC,

Respondent.

October 4, 2017

Respondent violated (1) NYSE Arca Equities Rule 7.33, by failing to populate approximately 3,596,850 orders with the correct capacity code, and (2) NYSE Arca Equities Rule 6.18, by failing to reasonably supervise orders regarding the usage of the correct capacity code. Consent to censure and a $12,500 fine.

Appearances

For the Complainant: Theresa Clarkson, Esq., Eric S. Brown, Esq., and Robert A. Marchman, Esq., FINRA Department of Market Regulation.

For the Respondent: Jason Milken, for Chimera Securities, LLC.

DECISION

Chimera Securities, Inc. ("Chimera" or the "Firm") and NYSE Arca, Inc. entered into an Offer of Settlement and Consent for the sole purpose of settling this disciplinary proceeding, without adjudication of any issues of law or fact, and without admitting or denying any allegations or findings referred to in the offer of settlement.' The Hearing Officer accepts the Offer of Settlement and Consent and issues this Decision in accordance with NYSE Arca Equities Rules.2

I FINRA's Office of Hearing Officers reviewed the Offer of Settlement and Consent under the terms of a Regulatory Services Agreement (as amended) among NYSE Group, Inc., New York Stock Exchange LLC, NYSE Arca, Inc., NYSE American LLC, and FINRA. 2 The facts, allegations, and conclusions contained in this Decision were taken from the executed Offer of Settlement and Consent.

NYSE ARCA, INC.

NYSE REGULATION,

Complainant, FINRA Proceeding No. 20150442333

V. October 4, 2017

CHIMERA SECURITIES, LLC,

Respondent.

Respondent violated (1) NYSE Arca Equities Rule 7.33, by failing to populate approximately 3,596,850 orders with the correct capacity code, and (2) NYSE Arca Equities Rule 6.18, by failing to reasonably supervise orders regarding the usage of the correct capacity code. Consent to censure and a $12,500 fine.

Appearances

For the Complainant: Theresa Clarkson, Esq., Eric S. Brown, Esq., and Robert A. Marchman, Esq., FINRA Department of Market Regulation.

For the Respondent: Jason Milken, for Chimera Securities, LLC.

DECISION

Chimera Securities, Inc. ("Chimera" or the "Firm") and NYSE Arca, Inc. entered into an Offer of Settlement and Consent for the sole purpose of settling this disciplinary proceeding, without adjudication of any issues of law or fact, and without admitting or denying any allegations or findings referred to in the offer of settlement. 1 The Hearing Officer accepts the Offer of Settlement and Consent and issues this Decision in accordance with NYSE Arca Equities Rules. 2

1 FINRA 's Office of Hearing Officers reviewed the Offer of Settlement and Consent under the terms of a Regulatory Services Agreement (as amended) among NYSE Group, Inc., New York Stock Exchange LLC, NYSE Arca, Inc., NYSE American LLC, and FINRA.

2 The facts, allegations, and conclusions contained in this Decision were taken from the executed Offer of Settlement and Consent.

FINDINGS OF FACTS AND VIOLATIONS

Overview

1. This matter involves Chimera's compliance with order marking requirements set forth in NYSE Arca Equities Rule 7.33 and related supervision between June 2014 and February 2016 (the "Review Period").

Background and Jurisdiction

2. Chimera became registered as an Equities Trading Permit Holder with NYSE Arca Inc. (the "Exchange") on June 13, 2014. Chimera is a proprietary trading firm that operates as an options and equities market maker, and has no customers.

3. FINRA's Department of Market Regulation ("Market Regulation") initially conducted a 2015 Trading and Financial Compliance Examination on behalf of several equities exchanges, and reviewed, among other things, trade activity and firm records for trade dates July 28 and 29, 2015. As a result of this examination and initial findings, the period of review was ultimately expanded to include the period between June 2014 and February 2016.

4. In a letter dated June 6, 2016, which the Firm received, the Legal Section of Market Regulation, on behalf of the Exchange, notified Chimera that it was investigating whether the Firm had violated order marking requirements as set forth in NYSE Arca Equities Rule 7.33.

Violations

5. During the Review Period, as a result of its failure to reset a default once it had gained the capability to directly access the equities markets, submitted inaccurate information to multiple equity exchanges by entering "Principal" orders as "Agency" orders in a total of more than 17 million instances, of which approximately 3,596,850 were submitted to the Exchange; this represented 100% of Chimera's orders entered into the Exchange by the Firm during the Review Period.3

6. During the Review Period, Chimera's supervisory system and written supervisory procedures ("WSPs") did not provide for supervision reasonably designed to ensure compliance with certain applicable securities laws and regulations, NYSE Arca Equities rules, and federal rules and regulations, including with respect to submission of accurate capacity codes on orders submitted to the Exchange. Specifically, the Firm's supervisory system did not include WSPs that provided for: (i) the identification of the person(s) responsible for supervision with respect to the applicable rules; (ii) a statement of the supervisory step(s) to be taken by the identified person(s); (iii) a statement as to how often such person(s) should take such step(s); and (iv) a statement as to how the

3 These inaccuracies impacted certain cross-market surveillances, but there was no identified market impact or harm to market participants.

2

FINDINGS OF FACTS AND VIOLATIONS

Overview

1. This matter involves Chimera's compliance with order marking requirements set forth in NYSE Arca Equities Rule 7.33 and related supervision between June 2014 and February 2016 (the "Review Period").

Background and Jurisdiction

2. Chimera became registered as an Equities Trading Permit Holder with NYSE Arca Inc. (the "Exchange") on June 13, 2014. Chimera is a proprietary trading firm that operates as an options and equities market maker, and has no customers.

3. FINRA's Department of Market Regulation ("Market Regulation") initially conducted a 2015 Trading and Financial Compliance Examination on behalf of several equities exchanges, and reviewed, among other things, trade activity and firm records for trade dates July 28 and 29, 2015. As a result of this examination and initial findings, the period ofreview was ultimately expanded to include the period between June 2014 and February 2016.

4. In a letter dated June 6, 2016, which the Firm received, the Legal Section of Market Regulation, on behalf of the Exchange, notified Chimera that it was investigating whether the Firm had violated order marking requirements as set forth in NYSE Arca Equities Rule 7.33 .

Violations

5. During the Review Period, as a result of its failure to reset a default once it had gained the capability to directly access the equities markets, submitted inaccurate information to multiple equity exchanges by entering "Principal" orders as "Agency" orders in a total of more than 17 million instances, of which approximately 3,596,850 were submitted to the Exchange; this represented 100% of Chimera's orders entered into the Exchange by the Firm during the Review Period. 3

6. During the Review Period, Chimera's supervisory system and written supervisory procedures ("WSPs") did not provide for supervision reasonably designed to ensure compliance with certain applicable securities laws and regulations, NYSE Arca Equities rules, and federal rules and regulations, including with respect to submission of accurate capacity codes on orders submitted to the Exchange. Specifically, the Firm's supervisory system did not include WSPs that provided for: (i) the identification of the person(s) responsible for supervision with respect to the applicable rules; (ii) a statement of the supervisory step(s) to be taken by the identified person(s); (iii) a statement as to how often such person(s) should take such step(s); and (iv) a statement as to how the

3 These inaccuracies impacted certain cross-market surveillances, but there was no identified market impact or harm to market participants.

2

completion of the step(s) included in the procedures should be documented. Accordingly, the Firm's WSPs were inadequate because they failed to ensure compliance with the requirements for trade reporting of capacity codes for orders entered into the Exchange.

7. Accordingly, Chimera violated NYSE Arca Equities Rules 7.33 and 6.18.

ORDER

Chimera Securities Inc. violated:

NYSE Arca Equities Rule 7.33, by failing to populate approximately 3,596,850 orders with the correct capacity code; and

NYSE Arca Equities Rule 6.18, by failing to reasonably supervise orders regarding the usage of the correct capacity code.

SANCTIONS

Chimera Securities Inc. is censured and fined $12,500.4

These sanctions are effective immediately.

2)7., al 2a." Maureen A. Delaney Chief Hearing Officer

4 Under the Offer of Settlement and Consent, the Firm agreed to pay a total fine of $45,000, of which $12,500 shall

be paid to NYSE Arca, Inc. and the remaining amount shall be paid to the NASDAQ Stock Market LLC, and Bats EDGX Exchange, Inc. in accordance with the terms of parallel settlement agreements in related matters between the Firm and these organizations.

3

completion of the step(s) included in the procedures should be documented. Accordingly, the Firm's WSPs were inadequate because they failed to ensure compliance with the requirements for trade reporting of capacity codes for orders entered into the Exchange.

7. Accordingly, Chimera violated NYSE Arca Equities Rules 7.33 and 6.18.

ORDER

Chimera Securities Inc. violated:

NYSE Arca Equities Rule 7.33, by failing to populate approximately 3,596,850 orders with the correct capacity code; and

NYSE Arca Equities Rule 6.18, by failing to reasonably supervise orders regarding the usage of the correct capacity code.

SANCTIONS

Chimera Securities Inc. is censured and fined $12,500.4

These sanctions are effective immediately.

Maureen A. Delaney Chief Hearing Officer

4 Under the Offer of Settlement and Consent, the Firm agreed to pay a total fine of $45,000, of which $12,500 shall be paid to NYSE Arca, Inc. and the remaining amount shall be paid to the NASDAQ Stock Market LLC, and Bats EDGX Exchange, Inc. in accordance with the terms of parallel settlement agreements in related matters between the Firm and these organizations.

3