UBS Securities Canada Inc. has been fined $2 million for demonstrating a continued pattern of “double printing”, failing to develop and implement trading supervision policies, and for failing to provide proper order and trade records.

Double printing affects the integrity of the marketplace by artificially inflating the trading volumes in the marketplace.

A hearing panel of Market Regulation Services Inc. (RS) approved the settlement with the firm today.

The double printing was uncovered by ongoing market surveillance by RS and in RS’s regulatory review into order handling procedures this year. These efforts revealed that from at least early 2003, UBS Securities Canada had engaged in double printing in its trading operation.

RS also found that the firm’s compliance department failed to effectively implement adequate audit trail testing procedures, and was deficient in its order marking and handling procedures.

RS said the firm’s compliance personnel lacked proper training and knowledge of the firm’s internal order management and audit trail system. The firm also failed to ensure that deficiencies identified by RS during the trade desk review process were rectified.

Ultimately, RS found the firm’s executive management and board of directors did not ensure that the compliance department was adequately resourced and trained to fulfill its responsibilities and that the firm’s compliance and supervision obligations were effectively fulfilled, it says.

This is the first enforcement action brought by RS for double printing. “This enforcement action is about safeguarding market integrity,” said Maureen Jensen, vice president market regulation, Eastern Region at RS, in a release. “While the firm’s clients are fortunate not to have suffered harm, UBS Securities Canada’s disregard of our warnings about double printing, trading compliance and supervision issues resulted in their failure to institute adequate processes to ensure the integrity of the marketplace.”

The board of directors of UBS Securities Canada has 30 days to certify to RS that the firm has retained an independent consultant to review its supervisory and compliance systems to ensure that they comply with trading rules.

The firm’s board also must provide a copy of the independent consultant’s report and recommendations to RS and certify to RS that all of the recommendations of the independent consultant have been implemented by June 30, 2005.

The firm must also pay $100,000 to offset the costs of the RS investigation.