FCA Fines Dinosaur Merchant Bank for CFD Surveillance Failings

The Financial Conduct Authority (FCA) has fined Dinosaur Merchant Bank Limited (DMBL) £338,000 for significant failures in its market abuse surveillance systems within its contracts for difference (CFD) business. The enforcement action underscores regulatory expectations that firms operating in high risk trading environments must maintain robust and effective monitoring frameworks.

The failings arose following the introduction of a new order management system in June 2024, which triggered a substantial increase in client CFD trading activity. Between June and October 2024, approximately $3.05 billion in trades were executed. However, these transactions were not captured by DMBL’s automated surveillance tools, creating a material gap in the firm’s ability to detect suspicious trading patterns linked to insider dealing or market manipulation.

Critically, although DMBL identified the surveillance deficiency in October 2024, it did not remediate the issue until May 2025. This delay materially impaired the firm’s capacity to identify and submit suspicious transaction and order reports (STORs), a core requirement under the UK Market Abuse Regulation (UK MAR). The FCA determined that these control failures breached Article 16(2) UK MAR, SYSC 6.1.1R, and Principle 3, which requires firms to organise and control their affairs responsibly and effectively.

From a supervisory perspective, the case reinforces the FCA’s continued scrutiny of firms offering CFDs, which are inherently complex and high risk instruments. Surveillance systems are not merely technical controls but form part of a firm’s broader financial crime framework, designed to safeguard market integrity and maintain investor confidence. Failures in this area are treated as systemic weaknesses rather than isolated operational lapses.

The FCA also highlighted the timeliness of the investigation, which reached a public outcome within nine months. This reflects the regulator’s ongoing efforts to accelerate enforcement processes and deliver more immediate deterrence. DMBL received a 30 per cent reduction in its financial penalty due to its cooperation, with the original fine calculated at £482,900. The firm ceased selling CFDs in May 2025.

For firms, the enforcement action provides a clear signal that system changes, particularly those impacting trade capture and monitoring, must be subject to rigorous testing and governance oversight. Any disconnect between trading activity and surveillance coverage is likely to be viewed as a serious control failure, particularly where remediation is delayed.

Read the press release here.