News Articles

Tribunal Upholds UK’s Financial Services Authority Decision To Ban And Fine Former UBS Advisers £1.3m For Not Being Fit And Proper In Relation To An Unauthorised Trading Scheme

Mon, 21 May 2012 12:17:53 GMT

The Upper Tribunal (Tax and Chancery Chamber) has directed the Financial Services Authority (FSA) to fine Sachin Karpe £1.25 million and Laila Karan £75,000 and ban them both from performing any role in regulated financial services for failing to act with integrity, in breach of Principle 1 of the FSA’s Statements of Principles and Code of Conduct for Approved Persons (“APER”) and for not being fit and proper persons.

Between January 2006 to January 2008, Karpe was Desk Head of the Asia II Desk at UBS AG (UBS) international wealth management business in London. Between February 2007 and January 2008, Karan worked as a Client Advisor on the Asia II Desk, reporting directly to Karpe. The Asia II Desk provided services to customers resident in India, or of Indian origin.

Karpe

During the relevant period Karpe carried out substantial unauthorised trading, predominantly in FX instruments, with a gross value of billions of pounds across 39 customer accounts. He also made unauthorised transfers and loans between client accounts in order to conceal losses arising from the unauthorised trading. He directed others (including Karan) to assist him in arranging the transfers and loans, and creating false documentation for the unauthorised trading. His scheme resulted in substantial losses for 21 customers. UBS has since paid compensation to the affected customers in excess of US$42 million.

Karpe also established an investment structure to enable a major (Indian resident) customer (via an investment fund incorporated in Mauritius) to breach Indian law in clear contravention of UBS guidelines. Ultimately, the customer invested over US$250 million in the fund. Karpe deliberately and repeatedly misled compliance in order to accommodate his customer.

Karpe also misled UBS and senior management about paying compensation to a customer using monies from another customer account.

The Tribunal found that: “Mr Karpe induced others serving on his desk to participate in what was an obviously dishonest course of conduct...we infer that the whole motivation was to benefit him indirectly and in the long term by obtaining new clients through his apparent prestige, increasing funds under management and thereby advancing his career and increasing his bonuses.”

The Tribunal accepted that the compliance failings at UBS might have created an environment within which staff could “get away with” misconduct – however, this was no excuse for Karpe’s sustained dishonesty.

Karan

Karan did not instigate the unauthorised trading; however, she was aware that unauthorised activity was occurring on some customer accounts for which she was responsible. Between February 2007 and January 2008, rather than escalating this knowledge, Karan assisted Karpe in concealing the unauthorised activity. In particular, Karan prepared false, handwritten telephone attendance notes purporting to record customer instructions she had received when she had taken no such instructions; routed transactions through a suspense account in order to conceal their origin and destination; signed a number of UBS documents recording the approval of transactions on the accounts without having received instructions or authorisation from the customers; and failed to escalate her knowledge of unauthorised loans between customers. Ms Karan also failed to escalate her knowledge that Mr Karpe had misled UBS and senior management about paying compensation to a customer using monies from another customer account.

The Tribunal noted that: “We recognise that Ms Karan had been placed in an extremely awkward situation through the manipulation of Mr Karpe. The fact, however, is that over and over again she chose to go along with and, on occasions, to facilitate Mr Karpe’s wrongdoing.”

Tracey McDermott, acting director of enforcement and financial crime, said:

“Karpe exploited and abused his position of trust, and persuaded more junior employees to engage in misconduct to assist him. Such behaviour is in breach of his obligations to his employer, his clients and his colleagues as well as to the regulator. It has no place in the financial services industry. We welcome the Tribunal’s confirmation that as well as banning Karpe, a significant financial penalty should also be imposed. This sends a clear message of the consequences of such behaviour.

“Karan sought to categorise herself as a victim in this matter. The Tribunal (as had the FSA) recognised that she did not initiate the misconduct, and was placed in a difficult position by Karpe. However, the findings and the resulting sanctions send a clear message that an approved person must take responsibility for their own actions. Where an approved person is aware that colleagues are engaging in misconduct, we expect them to blow the whistle, not to become involved themselves.

“Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle behaviour which falls below the high standards we expect.”

In November 2009 the FSA fined UBS £8million for systems and controls failures in relation to the unauthorised activity which occurred on the Asia II Desk. In December 2011 Jaspreet Singh Ahuja and in November 2009 Andrew Cumming, both former Asia II Desk client advisers, were banned and fined £150,000 and £35,000 respectively.

Background

A copy of the Decision of the Upper Tribunal can be found on the Tribunal’s website.
Read the Press Releases for Jaspreet Singh Ahuja, Andrew Cumming and UBS.
Karpe and Karan were in breach of Principle 1 of the FSA’s Statement of Principles and Code of Conduct for Approved Persons (APER).
Under Indian law, Indian persons (whether resident or non-resident in India) are not permitted to invest in Indian securities through a vehicle known as a “Foreign Institutional Investor” (FII) except in particular circumstances (which are not relevant here). Such vehicles are designed so that non-Indian investors may make investments in Indian securities.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
The FSA will be replaced by the Financial Conduct Authority and Prudential Regulation Authority in 2013. The Financial Services Bill currently undergoing parliamentary scrutiny is expected to receive Royal Assent by the end of 2012.

Hong Kong's Securities And Futures Commission Introduces Measures To Facilitate Establishment Of FDRC

Mon, 21 May 2012 12:10:35 GMT

To facilitate the establishment of the Financial Dispute Resolution Centre Ltd (FDRC) and enhance the regulatory framework (Notes 1 and 2), the Securities and Futures Commission (SFC) released a set of consultation conclusions today announcing amendments to the Code of Conduct for Persons Licensed by or Registered with the SFC (code of conduct).

Upon amending the code of conduct, financial institutions regulated by the SFC and the Hong Kong Monetary Authority (HKMA) will be required to participate in the Financial Dispute Resolution Scheme (FDRS) (Note 3) and inform their clients about their rights to refer disputes to the FDRC (Note 4).

Other amendments, which aim to combat market misconduct and improve regulatory oversight of financial markets, have been substantially remodelled following careful consideration of comments and feedback from the industry and the public (Note 5). The amendments include:

extending the retention period for telephone recordings for client orders from three months to six months;
banning the use of mobile phones to accept client orders in the workplace;
requiring written authorizations to allow third parties to place orders in client accounts;
requiring financial institutions to report to the SFC suspected breaches by clients of market misconduct provisions in Parts XIII and XIV of the Securities and Futures Ordinance; and
requiring financial institutions to permit their employees to provide expert witness services to the SFC and the HKMA when they wish to, unless there is a reasonable basis to prevent them.

“The SFC is in full support of the Government’s initiative in setting up the FDRC. We believe that the establishment of FDRC will further strengthen investor confidence in the financial industry,” said Mr Ashley Alder, the SFC’s Chief Executive Officer, “Other enhancements to the Code of Conduct will also enhance investor protection in Hong Kong.”

The FDRC-related amendments will take effect on 19 June 2012 (Note 6), while the others will come into force on 1 December 2012 (Note 7) to enable the industry to make the necessary adjustments to their systems. The amendments will be gazetted on or before 1 June 2012.

1. On 9 February 2010, the Government published the consultation paper entitled “Proposed Establishment of an Investor Education Council and a Financial Dispute Resolution Centre.” In the conclusions paper published on 13 December 2010, the Government announced its decision to establish the FDRC by mid-2012.
2. On 8 November 2011, the SFC issued the consultation paper on proposals to amend the Code of Conduct for Persons Licensed by or Registered with the SFC in relation to the establishment of the FDRC and the enhancement of the regulatory framework. The two-month public consultation ended in January 2012.
3. The FDRC will be responsible for administering the FDRS to handle monetary disputes not exceeding $500,000 (per case) between financial institutions and their clients by way of mediation and, failing which, arbitration.
4. The FDRC will commence operations in June 2012 and provide investors with a relatively speedy and affordable means of resolving financial disputes with financial institutions through mediation and/or arbitration.
5. The SFC received written submissions from 27 respondents, including industry practitioners, financial institutions and trade and professional associations. Summaries of the submissions and the SFC’s responses are in the consultation conclusions paper. Publishable submissions are posted on the SFC website.
6. FDRC-related amendments are made under paragraphs 12A, 12.3(c) and (d), 12.5(g) and 12.6 of the Code of Conduct.
7. Other miscellaneous amendments are made under paragraphs 3.9(b) and (c) and their explanatory notes, 7.1(a) and (b), 12.5(f) and 12.7 of the Code of Conduct and paragraphs 1A and 1B and their explanatory notes of Schedule 4 and paragraph 37 of Schedule 6 of the Code of Conduct.

Cinnober Acquires Nomura's Swedish Technology Development Centre - Strengthens Investment Bank Trading Knowledge

Mon, 21 May 2012 11:14:59 GMT

Cinnober today announces it has agreed to acquire Nomura's internationally renowned Swedish technology development organization in Umeå. The deal includes 40 specialists in developing equity trading applications and platforms.

Besides an enlarged development capability, the acquisition provides Cinnober with additional competence in delivering solutions to investment banks and brokers within execution services as well as expertise in high-volume, low-latency data warehousing. This takes Cinnober further in its aggressive growth strategy, which aims to increase sales with a broadened product portfolio.

"This is a great step in our company's development and moves us toward our vision for growth ahead," says Nils-Robert Persson, Executive Chairman of Cinnober. "I am very pleased that we're now expanding our family with many highly skilled developers who - like the team in Stockholm - also have a proven track record within financial technology for marketplaces, banks and brokers."

"Cinnober has achieved international success over the past decade working from a single office with almost 200 employees in central Stockholm. Our growth plans call for getting more people onboard as well," Persson continues. "Umeå is an innovative city in northern Sweden, with its own university and our new colleagues here will play an important role in our future expansion."

The technology development office stems from a Swedish financial IT company called Interbizz, founded in 2000. In 2003 Lehman Brothers acquired the company, which later was responsible for developing the LSE MTF system Baikal, among others. Nomura acquired the business in 2008. The main focus for Nomura's Umeå team has been developing technology applications and platforms for data capture and analysis in equities trading, giving Nomura's clients detailed analytics in real time. The team has also delivered platforms in compliance with financial transparency standards that provide trade reporting, market statistics and information.

Mark Butterfield, Chief Information Officer, EMEA at Nomura said: "Whilst our Umea Technology unit has been of huge value to our business, the demands of building a true global business has led us to determine a new global sourcing strategy within Technology. A key part of this is focusing our development effort into our core global centres. We fully believe that the acquisition of our Umea Technology assets by Cinnober will be a great result for all parties."

The deal includes a transitional support agreement for Nomura's ongoing system operations developed and managed from the Umeå office. Cinnober has an impressive track record of providing mission-critical solutions and services within trading, clearing and surveillance to leading trading and clearing venues. Portfolio expansions underway also target banks and brokers.

Nomura continues to operate an investment banking and global markets business out of its registered office in Stockholm.

EBS Announces Senior Leadership Team

Mon, 21 May 2012 10:44:25 GMT

ICAP announced today that EBS has finalised the structure of its senior leadership team, following the appointment of Gil Mandelzis as CEO of EBS in March 2012. The new appointments include:

Rafi Vasserman as Chief Information Officer. Rafi has been promoted into a new role which will oversee innovation and product development for EBS and Traiana.
Ed Brown as Head of Strategic Initiatives. Ed has been with ICAP for 10 years and has extensive experience of working with regulators and policymakers.
Jason Cohen as Global Chief Operating Officer. Jason has been a senior member of the ICAP Electronic Broking Management team for seven years.
Eliran Glazer will be seconded to the EBS management team from Traiana to assist with the delivery of a number of commercial projects, whilst also retaining his role as CFO of Traiana.

As previously announced, Nichola Hunter is Head of Product Management.

Steve Caplen remains CFO, Jeff Ward remains Global Head of Sales and Victoria Mellor, Global Head of Marketing.

Gil Mandelzis commented: “I am delighted to be working with such a talented and passionate team. Having the right people in place is crucial to ensuring that EBS remains at the forefront of global electronic FX trading, continually innovating and working in co-operation with all market participants.”

EDHEC-Risk Alternative Indexes: Weak Start To Second Quarter For Hedge Funds

Mon, 21 May 2012 10:14:15 GMT

Please click here to download the latest performance update of the EDHEC-Risk Alternative Indexes.

ICAP Appoints Andy Coyne As Chief Executive Officer Of Traiana

Mon, 21 May 2012 09:41:12 GMT

ICAP plc announced today that it has appointed Andy Coyne as Chief Executive Officer, Traiana. Andy Coyne joins Traiana from Citi, where he was Head of FX Prime and eCommerce Product. He will report to Gil Mandelzis, founder of Traiana, who has moved to the newly created role of Traiana Executive Chairman.

In his role, Coyne will be responsible for all aspects of Traiana’s global business across asset classes including foreign exchange (FX), exchange traded derivatives, equities, equity derivatives, fixed income and rates. Andy Coyne will be based in London.

In his six years at Citi, Andy Coyne played a pivotal role in building Citi’s global FX prime brokerage business and building the bank into one of the industry leaders in FX. Prior to Citi Andy was Head of FX Prime Brokerage at Deutsche Bank and held a number of management positions at Bankers Trust. He has also been a key leader in numerous industry initiatives and associations, serving on the board of CLS Aggregation, and previously serving on the board of FXAll prior to its initial public offering.

Gil Mandelzis, Executive Chairman of Traiana, said, “Andy is ideally suited to lead Traiana and take it to the next stage of its development. Andy has been building successful businesses in the industry for years, is widely recognised as a thought leader and is respected throughout the industry. We are delighted and proud that Andy recognised the tremendous opportunities that lie ahead for Traiana and chose to lead us in achieving them.”

Michael Spencer, CEO of ICAP plc, added, “We are delighted to welcome an executive of Andy’s calibre to the Group. Traiana is an important company in our portfolio and plays an increasingly key role in the post-trade landscape. Andy’s vision and experience will be invaluable as Traiana continues to grow.”

Andy Coyne, CEO, Traiana said, “I am thrilled to join the Traiana team at such an exciting time for the company and the industry. Traiana has fundamentally transformed the FX landscape and is helping customers extend this across asset classes in equities, exchange traded derivatives, fixed income and interest rates. I look forward to working with Traiana’s customers and partners to innovate and deliver even greater value in the future.”

Listed Firms Of Thai Alternative Bourse Post Higher Sales In Q1 - Q1 Revenues Of MAI’s Listed Firms Up 27.45 Pct From A Year Earlier - Net Profit Down 1.21 Pct Y-O-Y To THB 1.23 Bln

Mon, 21 May 2012 09:30:27 GMT

Companies listed on the Market for Alternative Investment (mai), in The Stock Exchange of Thailand (SET) group, reported a 27.45 percent increase in sales to THB 22.9 billion (approx. USD 738 million) in the first quarter of 2012, while net profit dipped slightly by 1.21 percent from a year earlier to THB 1.23 billion.

The performance was compiled from 72 companies of the total 73 mai-listed firms. Of the total, 55 companies, equivalent to about 76 percent of the total, made net profits, and 30 companies enjoyed higher sales and net profits, said mai President Chanitr Charnchainarong.

“The first-quarter sales improvement represented the promising growth of mai-listed companies. However, the slight fall of total net profit was du to higher selling costs, dragging gross profit margins down to 18.29 percent, from 21.32 percent earlier. For the next quarter, cost management should be an important factor for a business operation. We see business sectors which are especially promising are those in professional services, marketing activities, construction, and commerce,” Chanitr said.

Of the total mai firms, twelve posted year on year net profit growth of over 100 percent in the first quarter of 2012: Brooker Group pcl (BROOK), CMO pcl (CMO), Energy Earth pcl (EARTH), Interlink Communication pcl (ILINK), Multibax pcl (MBAX), Moong Pattana International pcl (MOONG), Pico Thailand pcl (PICO), Salee Industry pcl (SALEE), Simat Technologies pcl (SIMAT), Sherwood Chemicals pcl (SWC), Thai Industrial & Engineering Service pcl (TIES), and TRC Construction pcl (TRC).

Seven companies continuously reporting growth of sales and net profits over the last two years were Jubilee Enterprise pcl (JUBILE), Lighting & Equipment pcl (L&E), Master Ad pcl (MACO), Moong Pattana International pcl (MOONG), Pylon pcl (PYLON), Union Petrochemical pcl (UKEM), and Yuasa Battery (Thailand) pcl (YUASA).

In addition, MSCI, the world’s leading index provider, added EARTH’s shares into its MSCI Global Small Cap Indices, effective from May 31, 2012.

For more information on mai-listed firms’ financial statements, please visit www.mai.or.th, www.set.or.th and www.settrade.com.

Quote MTF Launches Outsourced Equities Trading Venue Services - Quote MTF’s QUBE To Fast-Track Industry Adoption Of Regulated Multilateral Trading Facilities

Mon, 21 May 2012 09:21:17 GMT

Quote MTF,the lit trading venue for Pan-European equities, today launched QUBE, a turnkey hosting and outsourcing solution for equities crossing venues under an MTF regulatory framework.

The service offering will provide QUBE clients with a white-labelled, hosted trading platform, regulated as a Multilateral Trading Facility (MTF). QUBE will empower financial institutions to concentrate on the business of trading, rather than on building and maintaining the technology infrastructure. Clients will select from a Model A or Model B service, depending on whether they leverage Quote MTF’s regulatory license or their own. Firms may then tailor their MTFs with different transparency levels, matching mechanisms, and fee models. QUBE will also offer online analytics, surveillance and the client’s choice of hosting environment segregation.

Tamas Madlena, Quote MTF CEO, comments: “It is incumbent on the brokerage community to leverage technology to continue to supply customers with choice. Quote MTF’s QUBE outsourced service model will assist organisations of any size to launch and operate a regulated trading venue. QUBE brings expertise to help navigate exacting crossing regulations, while practitioners deliver a fully integrated Enterprise-class turnkey operations solution. An extremely efficient business structure means a highly competitive charging model compatible with market conditions and the client’s potential revenues.”

The solution is based on Thymex, a high performance and scalable matching engine used globally to operate exchanges. The fastest matching system in Europe, Quote MTF has a flawless record having utilised the engine to trade more than €7bn since launch in April last year, while the platform has also been operating in Canada’s Omega ATS since 2009.

Madlena continues: “We have also seen keen interest in outsourcing from existing venues that can no longer justify the overhead of operating a platform. Centralising many of these venues also creates critical mass, allowing exchange subscribers to reduce technology costs and access more venues through fewer channels.”

Rupee And Gold Trading Drives New DGCX Daily Volumes Record - Exchange Trades 51,943 Contracts On May 16, Valued At US $ 1.98 Billion

Sun, 20 May 2012 11:01:01 GMT

Driven by an increase in Indian Rupee and Gold futures trading, the Dubai Gold and Commodities Exchange (DGCX) registered a new daily volume high of 51,943 contracts on Wednesday, May 16, 2012. The new daily volume record surpassed the previous best of 42,484 contracts set on May 9, 2012. The Exchange also set a new daily value record, with US $ 1.98 billion worth of contracts traded on Wednesday.

Wednesday also saw DGCX Indian Rupee futures registering yet another daily volume record of 44,821 contracts on the back of increased trading in back-month contracts - contracts that have more than one month to expire and offer tighter spreads. Gold futures, another key contributor to the daily record, registered a volume of 3,755 contracts on Wednesday, driven by heightened trading activity set off by a spike in the price volatility of the precious metal. On Wednesday, May 9, DGCX Gold futures achieved its highest daily volume of 6,068 contracts in 2012.

Gary Anderson, CEO of DGCX said: "We are very happy to see increasing back-month trading in Indian Rupee futures, which expands the opportunities available for Members to both manage price volatility and profit from price movements in the Indian Rupee. We are also encouraged by the volume increase in DGCX Gold futures, which has been enhanced by recent changes we made to the contract aimed at further boosting liquidity and facilitating tighter spreads. In particular, the introduction of a 'matching intent' facility that allows both physical and cash settlement of trades, has made the product even more attractive to retail and institutional traders. These changes are part of our constant endeavour to improve our contracts based on feedback from our member community and the market."

This year, DGCX surpassed the two million contracts mark in just 82 trading days - the earliest it has crossed this figure in any year since inception. Year-to-date volumes on the Exchange, at the end of April, reached 2,105,680 contracts, valued at $86.5 billion, a 131% rise from 2011. Last month, DGCX also listed the region's first Copper Futures contracts which got off to a robust start, trading 15,582 contracts in the first seven days of trading.

A Delegation From The Egyptian Exchange Meets With Souhag Businessmen To Promote For NILEX

Sun, 20 May 2012 11:07:40 GMT

A group of the stock exchange's officials met a number of businessmen, local investors in Souhag Governorate in addition to representatives of Chambers of Commerce as well as the officials handling the industry development file on Thursday, May 17, 2012. This meeting is one of a series of meetings the stock exchange holds periodically with the Egyptian businessmen to raise their awareness about the benefits of listing on NILEX and the growth opportunities the companies get through the funding.

In this regard, the stock exchange's strategy is based on spreading the joint meetings with the investors and businessmen associations in different areas of different investment activities; industrial and agricultural.

The Stock Exchange's management is keen to study its funding opportunities that are offered through its different tools, especially NILEX as a trading platform that allows funding for the small and mid cap enterprises via listing. This attention depends on the need and importance of NILEX to accommodate all companies on the wide geographical range of Egypt, not just focusing on Cairo.