FCA Fines BGC Brokers & GFI Subsidiaries

Due to inadequate control systems and ineffective detection of potential market abuse, the Financial Conduct Authority (FCA), the UK's regulatory watchdog, fined BGC Brokers LP and two GFI Group subsidiaries, GFI Brokers Limited and GFI Securities Limited, a total of £4,775,200.

According to the FCA, the inter-dealer brokers did not put the Market Abuse Regulation's (MAR) requirements for trade surveillance into practise. The failure to enforce appropriate frameworks has resulted in a significant increase in the risk of suspicious trading activity going undetected.

Trading firms, in the nearly two-year period between 2016 and 2018, used flawed and ineffective surveillance procedures that were unable to adequately address market abuse. Moreover, BGC and GFI systems did not cover all asset classes under MAR.

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“Oversight of our markets is a regulated partnership between the FCA and market participants, and so gaps or holes in a firm's ability to monitor and detect abusive trading poses direct risks to market integrity. This case is another example of the FCA's determination to ensure firms prioritise market integrity and the maintenance of high standards of compliance,” Mark Steward, the Executive Director of Enforcement and Market Oversight at FCA, commented.

The Executive Director of Enforcement and Market Oversight at FCA, Mark Steward, explained that “oversight of our markets is a regulated partnership between the FCA and market participants, and so gaps or holes in a firm's ability to monitor and detect abusive trading poses direct risks to market integrity. This case is another example of the FCA's determination to ensure firms prioritise market integrity and the maintenance of high standards of compliance.”

MAR was established six years ago, strengthening the standards for reporting and detecting market abuse. It includes a duty to keep an eye on orders and transactions to spot possible fraud efforts.

The FCA performs self-supervision of misuse by collecting data from all players in the regulated market. A specific market surveillance team controls the suspicious transaction and order reporting (STOR) regime. As part of its mandate, it carries out ad hoc checks among market participants to assess whether they control potential market abuses.