FSA Fines Nomura $2.9 Million For Inadequate Derivatives Controls
Nomura International has been fined $2.9 million by the Financial Services Authority (FSA) for systems and controls failings around book marking within its International Equity Derivatives (IED) business.
According to a statement by the FSA, “the systems and controls around marketing the IED books fell far short of those expected y the FSA for a business trading complex and high risk financial products.”
The regulator said Nomura breached two FSA Principles by failing to conduct business with due skill, care and diligence and failed to take reasonable care to organize and control its affairs responsibly.
In the statement, Margaret Cole, FSA director of enforcement and financial crime, said, “Firms must ensure their systems and controls develop at the same rate their business operations grow; if this doesn’t happen – as in Nomura’s case – they run the risk of having systems that are inadequate for their business.”
She added, “Financial instruments must be valued correctly by traders and a firm’s systems and controls must be able to minimise the risk of traders mis-marking their positions. When a firm’s systems and controls fall short of required standards, we will not hesitate to take action.”
Nomura cooperated fully with the FSA and qualified for a discount on the fine by agreeing to settle at an early stage in the investigation.
Nomura has “commissioned both internal and external reports on its systems and controls in this area and has taken extensive remedial action,” according to the FSA.