According to FINRA, Moomoo Financial Inc. (formerly Futu Inc.) was censured, fined $125,000, and required to undertake remedial measures for failing to report thousands of customer options positions to the Large Options Positions Report (LOPR) and for inadequate supervision of LOPR reporting obligations.

The firm's written supervisory procedures contained significant gaps regarding LOPR reporting. The procedures did not specify how often a supervisor should assess or report options positions, nor did they provide for any supervisory review to ensure reporting accuracy and completeness. Until March 2023, Moomoo had no system or process in place to identify or report customer options positions held in omnibus accounts to the LOPR. An omnibus account is a single account that holds positions for multiple underlying customers, and proper position reporting from these accounts is essential for market surveillance.

The firm's failure to identify and report positions in omnibus accounts meant that thousands of reportable options positions went unreported to FINRA. The LOPR is a critical regulatory tool that provides FINRA with visibility into large options positions that could pose risks to market integrity or indicate potential manipulative activity. When firms fail to report these positions, it undermines regulators' ability to surveil the options markets effectively.

After implementing a tool to identify and report customer options positions from omnibus accounts, the firm experienced a separate reporting failure. Moomoo deleted expiring option positions from its LOPR reports, which was incorrect. Only after FINRA alerted the firm to this issue did it cease deleting those positions.

Even after implementing its LOPR reporting system, the firm's operating procedures remained deficient. The procedures did not indicate how often LOPR reporting steps should be taken or provide for any supervisory review of the reporting process or data accuracy.

For investors, this case highlights the importance of firms having robust systems to track and report large positions. These reporting requirements help regulators monitor for market manipulation and excessive risk-taking. The firm's remedial undertaking should help ensure proper LOPR reporting going forward.