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FCA fines broker firm £409k over trade surveillance system

A London-based broking and investment firm has been handed a fine by the FCA for its failure to update its risk surveillance systems following a business model change.

Linear Investments’ trading is primarily conducted via electronic Direct Market Access.

The firm saw increased trading volume following a business model change prior to November 2014.

The regulator says Linear incorrectly assumed it could rely upon post-trade surveillance by the brokers through which it executed transactions during this period.

After Linear became aware of the need to have its own post-trade surveillance system in November 2014, it took until the following August for effective systems remedying the breach to be put in place.

In its decision notice, the FCA says Linear’s breach of Principle 3 by failing to control its affairs responsibly with suitable risk management systems rendered it unable to detect or report potential instances of market abuse.

The FCA says firms are expected to ensure they identify and manage the kind of market abuse risks that Linear was exposed to between January 2013 and August 2015.

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The regulator says: “Linear did not appreciate the need to have its own post-trade surveillance system based on information available to it and its perspective.”

Linear receives a 30 per cent discount on what would have been a £584,700 fine had it not agreed to settle with the FCA during the early stages of its investigation.

The regulator has already flagged Linear on the register. Using the regulator’s new find-an-adviser function, Money Marketing has seen an FCA statement already appears alongside Linear’s records.

It says: “This firm has requirements or restrictions placed on the financial services activities that it can operate. Requirements or restrictions can include suspensions.”


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