This notice shows the FCA's tough approach to market abuse and is a reminder to firms to ensure that they effectively supervise delegated or outsourced control functions.
The FCA found that Interactive Brokers (UK) Limited (IBUK) had inadequate systems and controls in relation to the detection and reporting of potential instances of market abuse. This is an important reminder that the FCA does not have to demonstrate that market abuse actually occurred in order to make a finding against a firm.
IBUK had delegated the conduct of its initial post-trade surveillance to a team in a US-based affiliate company. The FCA found that IBUK conducted inadequate oversight of the conduct of that team such that suspicious activity reports were not filed and potential cases of market abuse were missed.
The relevant period to which IBUK's conduct relates is before the introduction of MAR and the increased obligation to monitor and report suspicious orders. It is unlikely to be long before we see examples of enforcement action in respect of MAR.
IBUK did not reach an early settlement with the FCA and contested the case before the Regulatory Decisions Committee. It is therefore possible that IBUK could refer the case to the Upper Tribunal.
FCA fines Interactive Brokers (UK) Limited £1,049,412 for poor market abuse controls and failure to report suspicious client transactions