LONDON, Jan 25 (Reuters) - The London-based business of Interactive Brokers Group, an electronic brokerage firm, has been fined just over one million pounds ($1.4 million) for poor market-abuse controls and failure to report suspicious client transactions.
The Financial Conduct Authority (FCA) said on Thursday that International Brokers UK (IBUK) had failed to report potentially suspicious trading by its clients three times before stock market announcements from February 2014 to February 2015.
On two occasions, the online broker’s post-trade surveillance reports failed to identify highly profitable trading by an IBUK client close to a public announcement. On a third occasion, a highly profitable trade was picked up but not investigated and escalated properly, 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,” said Mark Steward, the FCA’s head of enforcement and market oversight.
“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,” he added.
Under anti-market abuse rules, financial companies have to report suspected market abuse to the FCA with so-called Suspicious Trading Reports (STRs).
Interactive Brokers was not immediately available for comment. ($1 = 0.7006 pounds) (Reporting by Kirstin Ridley; Editing by Jason Neely and Hugh Lawson)