Release Date: 7th December 2022

To access the original FCA document, click here.

Summary

The FCA has fined BGC Brokers LP, GFI Brokers Limited, and GFI Securities Limited (collectively, BGC/GFI) £4,775,200 for failing to implement appropriate systems and controls to effectively detect market abuse. This failure increased the risk of undetected suspicious trading, compromising market integrity.

Key Points:

• Fined Entities: BGC Brokers LP, GFI Brokers Limited, and GFI Securities Limited (BGC/GFI)
• Reason for Fine: Inadequate systems and controls to detect market abuse.
• Amount Fined: £4,775,200 (reduced from £6,821,800 due to a 30% early settlement discount)
• Time Period: July 2016 to January 2018

Reasons for Action:

BGC/GFI failed to comply with the Market Abuse Regulation (MAR) trade surveillance requirements, leading to deficient manual, automatic, and communications surveillance processes. Additionally, their systems lacked proper coverage of all asset classes subject to MAR, further increasing the risk of undetected market abuse.

Key Takeaways for Other Firms:

• Implement Effective Surveillance Systems: Ensure comprehensive and effective trade surveillance systems to monitor and detect market abuse.
• Adequate Coverage: Ensure that surveillance systems cover all asset classes subject to regulatory requirements.
• Regular Reviews and Updates: Continuously review and update surveillance processes to comply with evolving regulations and mitigate risks.
• Prioritise Market Integrity: Maintain high standards of compliance to protect market integrity and avoid regulatory penalties.

Summary of Findings:

Between July 2016 and January 2018, BGC/GFI’s surveillance processes were found to be deficient, failing to adequately address the risk of market abuse. These deficiencies meant that BGC/GFI did not comply with Article 16(2) of MAR and Principle 3 of the FCA’s Principles for Businesses, which require firms to take reasonable care to organise and control their affairs responsibly and effectively with adequate risk management systems.

Conclusion:

The FCA’s fine of £4,775,200 to BGC/GFI highlights the critical importance of having robust systems and controls to detect and prevent market abuse. Firms must prioritise the implementation and maintenance of comprehensive surveillance processes to ensure compliance with regulatory standards and protect market integrity. BGC/GFI has since enhanced their systems and controls, underscoring the necessity for continuous improvement in compliance practices.