FCA £500,000 Fine Of Sigma Broking Limited Identifies Another Broker To Avoid

• Sigma Broking Limited fined £531,600 by FCA
• UK regulator’s investigation reveals a catalogue of compliance breaches
• Traders are left wondering how to spot a trusted broker

As if falling asset prices weren’t enough of a concern for investors, a £531,600 fine issued by UK regulator the FCA to broker Sigma Broking Limited has highlighted the need for investors to be wary about which platform they use for trading.

Sigma Broking Limited Fined by FCA

Sigma, at face value, looks legitimate enough. It was set up in 2008 when it specialised in futures and options trading. A move into the Contract For Difference (CFD) and spread betting markets in 2014 should have resulted in it following a fairly standard growth path. Instead, it led to a hefty fine from the UK regulator and an amber, if not a red, flag against its name.

The FCA report highlights a catalogue of errors made by Sigma’s management. It seems they didn’t build the necessary infrastructure to ensure clients were protected to the level required.

“Sigma did not perform an adequate risk assessment or engage in any other meaningful preparations to ensure its compliance with regulatory standards.”

The report continues: “Sigma’s governing body, its board of directors (“the Board”), failed to take fundamental steps, such as holding regular board meetings where directors were provided with adequate management information.”

Source: FCA

The fact that the FCA identified that Board meetings weren’t adequately recorded using written minutes is a significant concern. Possibly more worrying is the claim made by the FCA that the compliance function was low on the list of priorities.

“Sigma’s Compliance Department operated without clear reporting lines, apportionment of responsibilities or appropriately qualified staff and failed to ensure that the firm had adequate policies and procedures in place in relation to the conduct of its CFD desk brokers.”

How to Choose a Safe Broker

The charges levied on Sigma were applied with a 10% discount. That is because the broker agreed to participate in the FCA’s ‘executive settlement process’ to avoid paying the initially quoted £590,700. That suggests Sigma is looking to put the matter behind it, take the rap, and move on.

If that is the case, it can be expected that improvements in processes and protocols will be forthcoming. But it does raise the question of how to spot irregularities at smaller brokers who, at first glance, appear to be as good as any other. Don’t forget the irregularities were identified by an FCA investigation which lifted the lid on what was going on.

Choosing a trusted broker remains one of the essential elements of any trading journey and acknowledging how tricky that can be is part of the process. The ForexFraud team once again offers the reminder that considering brokers from this list of firms comprehensively reviewed by our team of analysts provides the safest route into the market.

Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers, and you can share your experiences here. If you would like to know more about this particular topic or have been scammed by a fraudulent broker, you can also contact us at [email protected]

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

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Safest Forex Brokers 2024

	Broker	Info	Best In	Customer Satisfaction Score
#1	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#2	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#3	* 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#4	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#5	51% of retail CFD accounts lose money Founded: 2007	Global CFD & FX Broker (*Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more)	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#6	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#7	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker	5

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.