Regulatory gap analysis: FCA fines Dinosaur Merchant Bank Limited for failings in market abuse systems and controls

The FCA has fined Dinosaur Merchant Bank Limited £338,000 for failings in its market abuse systems and controls, specifically related to surveillance.

What happened?

Principally, they introduced a new system for Direct Market Access (DMA) which caused a spike in Contract for Difference trades. The trade data wasn’t ingested into the surveillance system which led to suspicious trades going undetected for a number of months.

But this wasn’t ‘just a data issue’. The governance and oversight of the surveillance system were noted as having deficiencies. The policies surrounding both the escalation of suspicion and the calibration of the surveillance system were lacking, and the risk assessment did not account for assessing the risk associated with changes to business controls, such as the introduction of DMA.

What does this mean for your firm?

This fine is a lesson in ensuring that there is a cohesive and holistic approach to managing market abuse risk. Ensuring that the policies are clear and complete, the risk assessment actually assesses risks, and the governance surrounding new systems and processes is robust and defensible.

Download our free Regulatory Gap Analysis template to identify vulnerabilities in your market abuse framework – before the regulators do.

Avyse Partners are an official content partner of the International Compliance Association. The ICA is the leading professional body for the global regulatory and financial crime compliance community.  ICA Members can gain access to Member-only content developed in partnership with Avyse that shares insights and best practice to help you meet the challenges of today and tomorrow.  Not yet an ICA Member? Join here