Thursday, 25 January 2018 11:54

Firm fined £1m for failings on suspicious transactions

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The FCA has today fined Interactive Brokers (UK) (IBUK) £1,049,412 for failing to identify suspicious transactions in its post-trade systems and controls from February 2014 to February 2015.

The FCA considered the breach a “serious and systemic weaknesses within IBUK’s procedures,” it said today.

IBUK is an online broker based in London which arranges and executes transactions in financial instruments such as CFDs (contracts for difference) for its UK clients and executes other transactions on behalf of other entities in the wider Interactive Brokers Group.

The company delegated its post-trade monitoring to a team based at another company within the Interactive Brokers Group in the US. However, the FCA said that it ‘failed to adequately’ have any input into the design and calibration of the post monitoring systems or even test their operations to capture any potential market abuse by it clients.

The FCA added that IBUK, “failed to provide effective oversight of the US team’s conduct of the reviews of the reports produced, it carried out no quality assurance or monitoring of the review of the reports, and it failed to ensure that the staff conducting the reviews were adequately trained.”

Mark Steward, director of enforcement and market oversight at the FCA, said: “Firms not only have a key responsibility to report suspicious conduct in our capital markets, they also have an obligation to ensure their trading systems are not used for the purpose of financial crime.

“IBUK’s systems were inadequate and ineffective in the face of potentially suspicious transactions; they fell below the appropriate standards and exposed counterparties and the market to risks they did not bargain for. The FCA will continue to enforce appropriate standards of market conduct to ensure our markets function well.”

The FCA said that the IBUK failed to submit suspicious transaction reports (STRs) to the FCA. Prior to being notified of the FCA’s concerns, during the relevant period IBUK failed to submit any STRs in relation to insider dealing.

The watchdog also said that it identified three occasions when IBUK failed to report suspicious trading by IBUK clients.

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Last modified on Thursday, 25 January 2018 12:33
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