City Index fined by FSA

The Financial Services Authority (FSA) has fined spread betting firm City Index £490,000 for failing to provide accurate transaction reports.

Between November 2007 and September 2009, City Index failed to submit accurate transaction reports in respect of approximately two million transactions, representing nearly 60% of its reportable transactions.

It failed to report approximately 55,000 transactions and reported approximately 1,970,000 transactions with one or more data fields completed improperly.

Firms are required to ensure they submit data for reportable transactions by close of business the day after a trade is executed. The FSA uses this data to detect and investigate suspected market abuse including insider trading and market manipulation.

City Index was also found to be in breach of FSA Principles, as the firm failed to put in place a mechanism for ensuring the accuracy and validity of its transaction reports, and failed to identify fundamental errors in its transaction reporting process upon the implementation of a new trading platform.

These breaches occurred despite the FSA sending repeated reminders to firms of their obligations to provide accurate data and of the importance of compliance with the FSA rules on transaction reporting.

Margaret Cole, managing director of enforcement and financial crime at the FSA, said: "City Index failed to report accurately a high proportion of its transactions for almost two years. This failure is a serious breach of our rules because it can have a damaging impact on our ability to detect and investigate suspected market abuse.

"Firms and their management must ensure they submit quality transaction reporting data and we encourage all firms to review the integrity of this data on a regular basis. We will continue to monitor the quality of firm reporting and we are committed to taking action where necessary to ensure firms comply with their reporting obligations."

The FSA said the firm has taken a number of steps to address the concerns raised including commissioning a formal review of its transaction reporting processes by external consultants and implementing a comprehensive remediation project.

It was also given a 30% discount on the original £700,000 fine due to an agreement to settle at an early stage.