FSA fines ActivTrades £85k for failing to segregate client funds
The Financial Services Authority (FSA) has today fined ActivTrades Plc, a foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term broker, £85,750 for failing to protect clients’ assets adequately.
Under the FSA’s Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Read this Term 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.
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.
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.
The Financial Services Authority (FSA) has today fined ActivTrades Plc, a foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term broker, £85,750 for failing to protect clients’ assets adequately.
Under the FSA’s Client Money Client Money Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Client money refers to the money or margin – which may be any currency in the form of cash, check, draft, or electronic transfer – that a firm receives or holds for a client. Money held by a firm in the form of a stakeholder, which is are not payable on demand or immediately due, also refers to client money. The definition of client money does not apply to money held by businesses that operate in its own name on behalf of a client. Although the client does have to be in agreement before this arr Read this Term 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.
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.
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.