UK FSA hits FX broker with £85,750 fine

Regulator says ActivTrades failed to properly segregate clients' funds from its own

ActivTrades, a UK broker specialising in foreign exchange, has been fined £85,750 by the UK Financial Services Authority (FSA) for failings in handling client money.

Between April 2009 and September 2010, the amount of client money held by ActivTrades ranged from £3.4 million to £23.6 million, according to the FSA. However, it says, ActivTrades failed to make sure this money was properly segregated from firm money. This meant client funds would have been at risk should the firm hit financial difficulties, although the FSA says no client funds were lost as a result.

In its final notice to the firm, the FSA said the charges were particularly serious because not only were several flaws found in ActivTrades’ client-money processes – “indicating that its client-money regime was findamentally flawed” – but also none of the failings had been detected by the firm’s compliance systems.

The failings came to light as part of the FSA’s recent project on client assets and money, which has seen several ‘Dear CEO’ letters published since 2009, notifying firms to make adequate arrangements to protect client money and assets. These highlighted issues for firms to consider and warned of impending visits.

The regulator visited ActivTrades in June 2010, identifying several weaknesses in client-money processes.

In agreeing to settle the charges at an early stage, ActivTrades qualifed for a discount on its original fine, lowering it by 30% from £122,500.