Interactive Brokers fined £1 million for market abuse failures

Online broker failed to submit any suspicious transaction reports on potential market abuse for a year.

The Financial Conduct Authority (FCA) has fined Interactive Brokers £1,049,412 for failing to oversee its market abuse systems and controls in the UK.

Interactive Brokers delegated its post-trade monitoring to a team within the firm based in North America, but did not calibrate or test the operation to ensure it would capture any potential abuse being carried out by clients.

The FCA said the online broker did not carry out any quality assurance, monitoring of the review of the reports and failed to adequately train its staff.

The implementation of the Market Abuse Regulation (MAR) in July 2016 introduced new rules regarding intentions to manipulate the markets through insider dealing and unlawful disclosures of inside information.

Interactive Brokers failed to submit any suspicious transaction reports, as required under MAR, on potential insider dealing between the period of February 2014 and February 2015.

“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, director of enforcement at the FCA.

“[Interactive Brokers’] 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.”