8/28/2025 8:54:45 AM | 4 minute read

Notice in a nutshell: Sigma Broking Limited

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Katie Stephen

Co-Head of the Contentious Financial Services Group

Get in touch

Katie Stephen

Co-Head of the Contentious Financial Services Group

The Financial Conduct Authority (FCA) has published a Final Notice regarding a financial penalty imposed on Sigma Broking Limited for breaches of Article 26 of the Markets in Financial Instruments Regulation (MiFIR) and Principle 3 because, for a five-year period, almost all the transaction reports it submitted to the FCA were incomplete and/or inaccurate.

Key takeaways

Key takeaways are set out directly below, but for more details see our ‘Notice in a nutshell’ table beneath these:

Implementation and review of automated processes: The Final Notice underscores the importance of implementation projects in ensuring systems are set up to deliver accurate and complete information from the beginning but also of keeping processes under review so that any issues can be identified early and do not persist undetected and uncorrected for many years. Sigma’s failures appear to have arisen as a result of errors which occurred when the reporting system was initially set up as part of its the Markets in Financial Instruments Directive (MiFID II) implementation and which were subsequently not corrected. Any automated process is only as good as the programming at the start and carries a risk that a single ‘baked in’ defect may result in widespread and long-lasting breaches.
Triggers for self-assessment: Firms are well advised to give regular consideration to conducting proactive reviews including in the event of certain triggers such as a change in the law; a system upgrade; or issues arising elsewhere in the business. Within the last three years, Sigma had been the subject of FCA enforcement action for similar failings in other areas of the business but this does not appear to have prompted it to conduct a review to satisfy itself with regards to the compliance of its transaction reporting and it transpired that breaches had continued for five years.
Keeping the FCA updated: When commissioning an external review, even in the absence of any issues having been identified, consider whether to keep the FCA informed of the existence and ongoing nature of the review. The FCA comments that it was not informed by Sigma of the engagement of a third party until after the firm had been contacted by the FCA as a result of a discrepancy identified by the FCA. Staying on the front foot with the regulator may be useful in mitigating the risk of adverse reaction later on.
Read across to other areas of the business: When issues arise in one part of the business, it is imperative to consider all other areas which could be impacted and/or where similar issues could arise. The fact that Sigma had previously been the subject of enforcement action for similar breaches was one of the aggravating factors which increased the fine to over £1 million.

Decision maker	The FCA Settlement Decision Makers
Individual / Firm	Sigma Broking Limited
Related decisions	In 2022, the FCA published four Final Notices regarding enforcement action against Sigma and three directors in connection with similar transaction reporting failures in other areas of its business in the period 1 December 2014 to 12 August 2016
Sanction	A financial penalty of £1,087,300 (including 30% settlement discount). In coming to this figure, the FCA: attributed a value of £2 for each of Sigma’s inaccurate or incomplete transaction reports; determined that the misconduct merited a seriousness level of 4 including taking account of the five-year failure period; applied a 40% increase to take account of aggravating factors including previous related enforcement action against Sigma in 2022 and failure to “quickly, effectively and completely” bring the breaches to the FCA’s attention (a review initiated by Sigma was not in direct response to the earlier fine and Sigma did not inform the FCA of the review until after it was contacted by the FCA); applied a multiplier of 2 to achieve deterrence.
Provisions	Article 26 MiFIR Principle 3 (Management and control)
Relevant period	1 December 2018 to 1 December 2023
Key facts	January 2018: The MiFID transaction reporting rules were replaced with the MIFID II and MiFIR transaction reporting regime (subsequently onshored in the UK post-Brexit). Article 26 MiFIR required Sigma to make transaction reports which included buyer and seller information and details of client allocation. March 2023: Sigma initiated a review of its transaction reporting (following the firm becoming an approved Category 1 Member of the LME in January 2022). May 2023: FCA contacted Sigma about a discrepancy it had identified in the reporting of buyer and seller information. June 2023: Sigma responded confirming that it had identified issues with its reporting and initiated a review (following which monthly updates were provided to FCA). August 2023: third party review identified issues with transaction reporting processes. These resulted from incorrect setup and weaknesses in reporting logic during MiFID II implementation. December 2023: Sigma undertook an exercise to implement fixes. January 2024: Sigma notified the FCA regarding potential reporting failures including reversal of buyer/seller information and underreporting of client allocation. February 2025: Sigma finalised back reporting of affected trades and accurately quantify the number of errors and omissions as 924,584.
Key findings	Almost 100% of reportable transactions undertaken by Sigma’s trading desks during the five-year relevant period were either incomplete or inaccurate or both. The reporting failures resulted from the reporting system initially having been set up incorrectly and these set up errors were not corrected throughout the relevant period. This gave rise to a breach of Article 26 MiFIR and a breach of Principle 3 as Sigma’s systems and controls responsible for transaction reporting were inadequate.