The London Metal Exchange (LME) has issued a notice regarding the settlement of an investigation between General Clearing Member, Sigma Broking Limited, and LME Clear Limited. The investigation focused on alleged breaches of LME Clear Rules 3.2.1, 3.2.2, and 8.2.4, as well as Membership Procedure Part B 3.1A (i) and (k), which occurred between 21 February 2022 and 31 October 2022 (the “Relevant Period”).

The investigation revealed that Sigma’s systems, procedures, and controls related to margin calls were insufficient during the Relevant Period. The deficiencies primarily stemmed from the lack of written policies, inadequate procedures, and insufficient training for employees. Additionally, Sigma’s procedures for lodging collateral were overly brief and lacked detailed guidance on processes, roles, and responsibilities. The investigation also uncovered shortcomings in Sigma’s handling of warrant delivery due to the absence of clear policies and training.

Sigma Broking Ltd Settlement with Alleged LME Clear Rule

As a result, LME Clear determined that Sigma had violated LME Clear Rules 3.2.1, 3.2.2, and 8.2.4, as well as Membership Procedure Part B 3.1A (i) and (k). Despite the findings, Sigma has agreed to settle the matter without admitting or denying the breaches. The company fully cooperated with the investigation, and LME Clear did not find evidence of deliberate wrongdoing.

In response to the investigation’s findings, Sigma has made significant improvements to its internal risk management systems, procedures, controls, and training programs. These measures aim to address the issues identified during the investigation. To resolve the matter, Sigma has agreed to pay a financial penalty of £70,000.

Sigma remains a General Clearing Member of LME Clear, and LME Clear acknowledges the company’s ongoing efforts to enhance its operations.

This settlement underscores the importance of maintaining robust risk management and compliance frameworks in the clearing and trading sectors. Moving forward, Sigma’s enhanced operational practices are expected to ensure greater adherence to LME Clear’s rules and contribute to a more secure and efficient trading environment.

Also, stay updated with the Latest Broker News.