FSA fines ActivTrades £85k for failing to segregate client funds
The Financial Services Authority (FSA) has today fined ActivTrades Plc, a foreign exchange broker, £85,750 for failing to protect clients’
The Financial Services Authority (FSA) has today fined ActivTrades Plc, a foreign exchange broker, £85,750 for failing to protect clients’ assets adequately.
Under the FSA’s client money rules, firms are required to keep client money separate from the firm’s money in segregated accounts with trust status. This helps to safeguard and ring-fence the client money in the event of the firm’s insolvency.
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Between 14 April 2009 and 2 September 2010, the amount of client money held by ActivTrades ranged between £3.4 million and £23.6 million and averaged £12.2 million. ActivTrades failed to ensure that this money was fully segregated; putting some client money at risk should the firm become insolvent.
ActivTrades’ failures were discovered as part of an FSA thematic review into the management of client assets and money held by firms. Based on the initial findings of this review, the FSA required ActivTrades to engage a skilled person to review its client money arrangements. The skilled person’s report highlighted that, on several occasions, client money was mixed with ActivTrades’ funds. In particular between 29 January 2010 and 14 June 2010, client money totalling €800,000 was held in an account used for ActivTrades’ own funds, which meant that it was not adequately protected.
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The skilled person’s report also identified a number of other serious failings including failure to perform client money calculations or reconciliations accurately and failure to pay interest on client money. ActivTrades was also unable to monitor and assess the adequacy of its client money arrangements due to weaknesses in the information provided to senior management.
Linda Woodall, FSA director of small firms, said:
“It is essential for firms to adhere to our client money rules and our recent action in this area shows our continuing focus on the importance of managing and protecting client assets adequately.
“Ensuring the necessary client money safeguards are in place is a key element of consumer protection, and firms of all sizes must ensure that any client money they hold is properly segregated.”
ActivTrades co-operated fully with the FSA in the course of its investigation and has taken significant steps to rectify its client money issues.
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2010/11 havent been so great for UK based FX firms, alpari, city index and now activ trades.
if you look at fsa’s approach of self regulation and all the oness on the broker. then there is chance that the broker cna be at fault. the regulator needs to put more guidelines (not the usual 100 page doc) that are easy to read and implement.
2010/11 havent been so great for UK based FX firms, alpari, city index and now activ trades.
if you look at fsa’s approach of self regulation and all the oness on the broker. then there is chance that the broker cna be at fault. the regulator needs to put more guidelines (not the usual 100 page doc) that are easy to read and implement.
@ Adil :what happened with cityindex ?
@ Adil :what happened with cityindex ?
they got in trouble because they didnt actually report alot of their transactions. as per FSA rulings a broker needs to report transaction by end of bus the next day. not sure if i can add a link but if you search in google fsa city index all will be revealed. Heres an extract form the text: he Financial Services Authority (FSA) has fined City Index Limited (City Index) £490,000 for failing to provide accurate transaction reports to the FSA. Firms are required to ensure they submit data for reportable transactions by close of business the day after a trade… Read more »
they got in trouble because they didnt actually report alot of their transactions. as per FSA rulings a broker needs to report transaction by end of bus the next day. not sure if i can add a link but if you search in google fsa city index all will be revealed. Heres an extract form the text: he Financial Services Authority (FSA) has fined City Index Limited (City Index) £490,000 for failing to provide accurate transaction reports to the FSA. Firms are required to ensure they submit data for reportable transactions by close of business the day after a trade… Read more »
I just got done reading the majority of the pdf of the official FSA ruling. Those were some serious accusations indeed. What surprised me the most was how careless ActivTrades was with funds. Mixing client funds with their own, not checking the institutions they were placing client funds into, Not doing daily accounting updates/reconciliations. The list just kept going and going. What is so interesting is that the majority of these things are just basic things any financial firm has to do. It looked like they had the money to do it, they just didn’t do it.
I just got done reading the majority of the pdf of the official FSA ruling. Those were some serious accusations indeed. What surprised me the most was how careless ActivTrades was with funds. Mixing client funds with their own, not checking the institutions they were placing client funds into, Not doing daily accounting updates/reconciliations. The list just kept going and going. What is so interesting is that the majority of these things are just basic things any financial firm has to do. It looked like they had the money to do it, they just didn’t do it.
Big?
Big?
In my opinion, after reading through the docs, its questionable if they are fit to operate such a business at all and if their license shouldn’t be revoked. They came off easy – 85k is probably less than yearly comp of senior staff.
In my opinion, after reading through the docs, its questionable if they are fit to operate such a business at all and if their license shouldn’t be revoked. They came off easy – 85k is probably less than yearly comp of senior staff.