Seven UK retail brokers had material weaknesses in the systems meant to catch insider dealing by clients, the Financial Conduct Authority (FCA) said yesterday (Wednesday). It named none of the firms.
All seven were required to strengthen their surveillance after the visits. In some cases the FCA used skilled person reviews, carried out by outside experts, to check the fixes.
London's trading industry is coming home!
Under the UK Market Abuse Regulation (UK MAR), brokers must flag suspicious orders and trades to the FCA, and those reports feed its insider dealing work.
The regulator received 3,806 suspicious transaction and order reports (STORs) in 2025, down 16% from 4,528 in 2024, with insider dealing reports down 21% to 3,124.
A Suspicion Threshold Set Too High
The findings, published in the FCA's Market Watch 86 newsletter, focus mainly on insider dealing. The regulator also looked at manipulation that retail brokers are exposed to, such as pump and dump schemes.
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Webull's UK chief executive, Nick Saunders, warned last year that such schemes can send a stock down 90% in seconds.
The first set of findings concerned the decision to report. Some firms set the bar for reasonable suspicion too high, and some procedures discouraged escalation unless an analyst could show a link between the client and the issuer.
Other procedures steered analysts toward closing alerts. The FCA reminded firms that a report does not require proof that market abuse took place.
Earlier Fines Over Surveillance and Reporting
Weak surveillance has already led to penalties. In March the FCA fined Dinosaur Merchant Bank £338,000 (about $450,000) after CFD trades placed through a new order system never reached its automated surveillance.
Those trades, executed between June and October 2024, had an underlying value of about $3.05 billion, according to the regulator. The bank stopped selling CFDs in May 2025.
In January 2025, CFD broker Infinox was fined £99,200 over 46,053 transaction reports it never submitted. The FCA said the gap risked market abuse going undetected.
Larger cases have involved wholesale firms. Citigroup's international broker-dealer paid £12.6 million in 2022 for failures in detecting market abuse.
Later that year, BGC Brokers and two GFI Group units were fined a combined £4.8 million for surveillance that did not cover every asset class subject to MAR.
Vendor Settings and Unmonitored Trades
Calibration was the second weak area. Some brokers applied one price-move threshold to large-cap and small-cap shares alike, and some set a minimum trade value so high that much client activity was left unmonitored.
Some staff could not explain how their surveillance system worked, and some firms relied on the vendor's default settings. Testing of those settings was often too limited, the FCA said.
Oversight was uneven too. Some senior managers had a limited grasp of surveillance, responsibilities were split across functions with no end-to-end owner, and quality assurance ranged from full reviews to none.
Some risk assessments ignored the firm's own client base, for example by treating institutional and retail clients alike. The regime is now a decade old, the FCA noted.
"Ten years after its introduction, these arrangements should be well-established," the regulator wrote.
A Different Result From the 2023 CFD Review
In April 2023, the FCA's Market Watch 73 reported on nine CFD and spread betting providers and said most could show their insider dealing alerts were largely effective.
That review still found gaps, including lookback periods as short as 24 hours and weak coverage of non-equity asset classes. Only one of the nine firms was checking the quality of alerts its analysts had reviewed.
This time the FCA said market abuse risks at UK retail brokers remain a supervisory priority. It added that the quality of reports from the visited firms has improved since the visits.
