FCA fines Interactive Brokers (UK) Limited £1,049,412 for poor market abuse controls and failure to report suspicious client transactions
The FCA has imposed a fine on Interactive Brokers (UK) (IBUK) of £1,049,412 for failings in its post-trade systems and controls for identifying and reporting suspicious transactions in the period February 2014 to February 2015.
IBUK delegated its post-trade monitoring to a team based at another company within the Interactive Brokers Group in the US. However, IBUK failed to adequately input into the design and calibration of the post-trade monitoring systems, or test their operation, to ensure that potential market abuse by its clients would be captured, and it failed to provide effective oversight of the US team’s conduct of the reviews of the reports produced. In particular, 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.
This heightened the risk of IBUK failing to submit suspicious transaction reports (STRs) to the FCA. Prior to being notified of the FCA’s concerns, IBUK failed to submit any STRs in relation to insider dealing and the Authority has identified three occasions on which IBUK failed to report suspicious trading by IBUK clients.
This situation highlights the importance of doing AML/KYC in accordance with the local rules.