Three brokers have been fined £4.7m by the FCA for failing to ensure they had appropriate systems and controls in place to effectively detect market abuse.

An investigation by the regulator found that BGC Brokers LP, GFI Brokers Limited and GFI Securities Limited failed to properly implement the Market Abuse Regulation (MAR) trade surveillance requirements, a failing that meant there was an increased risk that potentially suspicious trading would go undetected.

The three firms are inter-dealer brokers specialising in broking exchange listed and over-the-counter financial products and related derivative products. The FCA stated that it is of “fundamental importance” to the integrity of the market that brokers such as BGC and GFI have effective market abuse surveillance systems in place.

Between July 2016 and January 2018, the firms had manual, automatic and communications surveillance processes that were found to be “deficient”, and according to the regulator “inadequate” in properly addressing the risk of market abuse. The three firm’s systems for monitoring market abuse also did not have proper coverage of all asset classes which are subject to MAR.

Executive director of enforcement and market oversight at the FCA, Mark Steward, said: “Oversight of our markets is a regulated partnership between the FCA and market participants and so gaps or holes in a firm’s ability to monitor and detect abusive trading poses direct risks to market integrity.

“This case is another example of the FCA’s determination to ensure firms prioritise market integrity and the maintenance of high standards of compliance.”

BGC and GFI have since enhanced their systems and controls.

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