Spreadbetting and CFD provider City Index has been fined £490,000 for failing to provide accurate transaction reports to the Financial Services Authority.

The City watchdog reduced the fine by 30 per cent from £700,000 after City Index agreed to settle at an early stage.

Investigators at the regulator found City Index failed to submit accurate transaction reports for around 2 million transactions between November 2007 and September 2009.

The company was also found to be in breach of FSA rules failing to identify basic errors in its transaction reporting process when it was implementing a new trading platform.

City Index continued to make these errors despite the FSA sending repeated reminders of firms’ obligations to provide accurate data under the watchdog’s compliance rules.

Margaret Cole, managing director of enforcement and financial crime at the FSA said the company failed in its regulatory duties for nearly two years.

She explained, ‘This failure is a serious breach of our rules because it can have a damaging impact on our ability to detect and investigate suspected market abuse.

'Firms and their management must ensure they submit quality transaction reporting data and we encourage all firms to review the integrity of this data on a regular basis. We will continue to monitor the quality of firm reporting and we are committed to taking action where necessary to ensure firms comply with their reporting obligations.’

The firm has taken a number of steps to address the concerns raised including commissioning a formal review of its transaction reporting processes by external consultants and implementing a comprehensive remediation project.

Simon Bird, chief operating officer at City Index, said today’s fine was the result of historical errors.

He added, ‘Since being made aware of the error, the company immediately commissioned an external review of processes and procedures. ‘

As a result, the company has introduced improvements which will ensure that the error is not repeated. City Index is fully compliant with the FSA’s rules on Transaction Reporting and no client was affected.’