FCA Fines Dinosaur Merchant Bank for CFD Surveillance Failures

The Financial Conduct Authority (FCA) has fined Dinosaur Merchant Bank Limited (DMBL) £338,000 for failing to implement effective systems to detect and report suspicious trading in its contracts for difference (CFD) business.

Contracts for Difference (CFDs) are complex, high-risk financial products that allow investors to speculate on price movements across a wide range of assets. Due to their nature, firms offering CFDs are required to maintain robust monitoring systems to detect potential insider dealing and market manipulation.

Breakdown in Trading Surveillance

In June 2024, DMBL introduced a new order management system, which led to a significant surge in client trading activity. Between June and October 2024, the platform processed trades with a total underlying asset value of approximately $3.05 billion.

However, a critical failure meant that these trades were not captured or reviewed by the firm’s automated surveillance systems. As a result, potentially suspicious activity may have gone undetected, posing a risk to overall market integrity.

Although the issue was identified internally in October 2024, DMBL failed to take timely action. The deficiencies were not fully addressed until May 2025, significantly limiting the firm’s ability to identify and report suspicious trading during that period.

Regulatory Response and Enforcement

“DMBL’s failures had the potential to undermine the integrity of the market. Firms must ensure they have effective surveillance arrangements in place. We will continue to take action where this is not the case.”

— Steve Smart, Joint Executive Director of Enforcement and Market Oversight, FCA

The FCA acknowledged that DMBL fully cooperated with the investigation, qualifying the firm for a 30% reduction in its financial penalty. Without this discount, the fine would have totalled £482,900.

The firm ceased its CFD business operations in May 2025. This case, concluded within just nine months, highlights the FCA’s continued efforts to accelerate enforcement actions while maintaining strong oversight of financial markets.

The enforcement action reinforces a clear message: firms must maintain effective systems and controls to detect market abuse and protect the integrity of financial markets.