Transaction Reporting: The £1M Lesson from Sigma Broking’s FCA Fine

The Financial Conduct Authority (FCA) has fined Sigma Broking Limited £1,087,300 for failing to submit complete and accurate transaction reports for five years. The issue was first raised with the firm in May 2023 after being picked up by the FCA’s monitoring systems. Almost 100% of the transactions handled by the firm between 01/12/2018 and 01/12/2023 were incorrectly reported. The incorrect reporting was caused by the firm’s system being incorrectly set up and it persisted due to critical weaknesses in its internal reporting process.

This action comes after a £531,600 fine issued in October 2022 for previous transaction reporting failures by Sigma. In the FCA’s October 2022 enforcement, action was taken not only against the firm, but also against three directors, of whom two were banned from the financial services industry.

This repeated failure highlights a significant shortcoming in establishing strong controls and learning from previous enforcement actions. The new fine demonstrates the FCA's increasing zero tolerance for firms that neglect to address systemic issues.

Why does this matter? Without precise and timely data, the FCA's ability to effectively detect and investigate market abuse, track illicit activities, and maintain a fair marketplace is severely compromised.

Lessons Learned

This fine serves as a clear reminder for all firms with transaction reporting obligations:

• Data accuracy is essential. Firms should invest in robust systems and processes to ensure that their transaction reports are always complete and accurate. Firms should test their systems to maintain data integrity.
• Proper system setup is crucial. Firms should ensure that their systems are correctly configured from the beginning to meet complex reporting requirements.
• Address systemic failures. Firms should recognise that their reporting plays a crucial role in supporting the regulator’s ability to protect the market and the consumers. Deficiencies in reporting can have serious consequences.

Thistle's View

This action is part of the FCA’s increased focus on transaction reporting and is the second enforcement action taken against a firm for breaching MiFIR transaction reporting requirements. Last month, the FCA published Market Watch 82, which focused on addressing failures in firms’ transaction reporting; read more on this topic in our blog post here. The FCA sees transaction reporting as a key tool for market supervision and identifying market abuse. Firms should take care to ensure their transaction reports are compliant and should complete any necessary remediation work quickly.

How Thistle Initiatives Can Help

Thistle Initiatives can support you with:

• Carrying out an audit of your current transaction reporting arrangements;
• Identifying areas of weakness and how to improve these;
• Providing assistance with enhancing your governance processes, systems and controls to promote good outcomes for consumers and proactive risk management.

Get in touch at info@thistleinitiatives.co.uk or call 020 7436 0630 to speak with our team. 

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