The Financial Conduct Authority (FCA) has imposed a significant fine of £1,087,300 on Sigma Broking Limited for what it describes as “serious and systemic” transaction reporting failures. The firm failed to submit complete and accurate transaction reports for nearly all its transactions over a five-year period. This action is the second fine levied against Sigma for similar failures, underscoring the FCA’s heightened focus on data quality and market integrity. The regulator uses this data to detect and investigate market abuse and financial crime, and the firm’s failings severely hampered its ability to do so. The fine would have been even higher (£1.55 million) had the firm not agreed to an early settlement.
- 💰 Significant Financial Penalty: The FCA imposed a fine of over £1 million on Sigma Broking.
- 🗓️ Sustained Failure: The firm submitted incomplete or inaccurate reports for a five-year period, from December 2018 to December 2023.
- 📊 Near-Total Failure: The FCA found that 924,584 reports were incorrect or incomplete, representing almost 100% of the firm’s reportable transactions during that time.
- 🚨 Systemic Weaknesses: The failures were not isolated incidents but a result of serious and systemic weaknesses, including incorrect system setup and a lack of effective controls.
- ⚖️ Repeat Offender: This is the second time the FCA has taken action against Sigma for transaction reporting failures, with a previous fine of £531,600 in 2022.
This matters because the FCA is a data-led regulator. The transaction data submitted by firms is a crucial tool for the FCA to maintain market integrity, identify market abuse, and fight financial crime. When this data is inaccurate or incomplete, it creates a significant blind spot for the regulator, compromising its ability to protect the market. The repeated nature of the failures and the size of the fine demonstrate that the FCA will not tolerate firms that neglect their reporting obligations and fail to learn from past mistakes.
Things to think about
- Review and validate your firm’s transaction reporting systems and controls. Ensure they are correctly configured and regularly tested for accuracy and completeness.
- Establish a robust governance framework around transaction reporting. This includes clear lines of responsibility, regular oversight by senior management, and timely remediation of any identified issues.
- Conduct regular internal audits and reconciliation checks of your transaction data against front-office records to identify and correct any discrepancies proactively.
- Pay close attention to guidance from the FCA, such as its “Market Watch” newsletters, and incorporate these learnings into your compliance processes.
- Recognise that a prior enforcement action, or even a regulatory warning, will likely be considered an aggravating factor in any future breaches, leading to a larger penalty.
Read the full article: FCA fines Sigma Broking Limited for transaction reporting failures
