The UK’s Financial Conduct Authority has fined Citigroup Global Markets Limited 12,553,800 GBP for failure to comply with the Market Abuse Regulation Article 16(2), which requires “effective surveillance”, as well as Principle 2 of the Authority’s Principles for Businesses. The notice can be found here. The fine is levied due to gaps in the surveillance programme rather than actual abuse. The requirement under MAR Article 16(2) applies to “Professional Persons Arranging or Executing Transactions”, which includes entities that are not financially authorised such as those in energy and commodities.
The fine relates to the requirements of MAR and the MAR delegated act not being implemented for a period after MAR started in July 2016. In particular:
- Risks assessments were not carried out adequately.
- Many risks were left uncovered for some time after the start of MAR.
- The list of indicators found in the MAR Delegated Act were not sufficiently covered.
- As a result, automated surveillance was not in place when required.
The notice discusses the fact that while the MAR Delegated Act does not require automated surveillance in every case, it usually is required in large and complex organisations, and very often in others as well.
The fine was discounted due to early settlement.