On January 12, the SEC fined two stock exchanges $14 million dollars for allegedly violating the Exchange Act by failing to accurately describe in their rules the order types being used on the exchanges. In its investigation, the SEC found that while operating under rules that described a single “price sliding” process for handling buy or sell orders, the exchanges actually offered three variations of “price sliding” order types. The SEC found that the “exchanges’ rules did not completely and accurately describe the prices at which those orders would be ranked and executable in certain circumstances, and they also failed to describe the execution priority of the three order types relative to each other and other order types.” Additionally, the SEC found that the exchanges disclosed certain information regarding how the order types operated to only some and not all of their members. The SEC determined that not all market participants were aware of how these order types operated. In addition to the $14 million penalty, the SEC order requires both exchanges, among other things, to (i) create and implement written policies and procedures related to the development of order types, and (ii) provide sufficient resources and regulatory staff to ensure regulatory functions are independent from their commercial interests. This is the SEC’s largest penalty against national securities exchanges.