FCA fines broker £409,000 for risk management failures

The regulator says that when Linear’s business model changed in 2015 and trading volumes increased, its previous manual oversight approach no longer provided adequate monitoring.

Up until November 2014, Linear mistakenly believed that it could rely upon post-trade surveillance undertaken by the brokers through which it executed transactions.

The FCA says Linear did not appreciate the need to undertake its own separate surveillance based on information available to it.

Its investigation found that after Linear became aware of the need to have its own post-trade surveillance system, it took until August 2015 for the firm to have effective systems in place.

This is the first case to be completed under a new process introduced for partly contested cases.

It allows firms or individuals under investigation to agree to certain elements of the case and contest others. This means they are still eligible for a discount of up to 30% on any penalty imposed.

In this case, Linear agreed facts and liability, but contests the level of penalty set out in the Decision Notice and has referred the issue to the Upper Tribunal.