Trade surveillance
Q3 2025 Enforcement Update
Douglas Moffat
•
Senior Vice President, Americas
October 7, 2025
During Q3, the FCA issued several Final Notices for regulatory failings pertinent to trade surveillance, transaction reporting, and best execution. While the individual circumstances vary, the underlying themes are familiar: inadequate monitoring systems, delayed breach identification, and insufficient governance over core compliance obligations.
Multiple firms received fines for failures in trade surveillance and reporting. The FCA cited specific control weaknesses, including poorly calibrated alerting parameters and reliance on manual processes in high-volume environments. In one case, a firm’s failure to report accurately under MiFIR was compounded by delays in identifying and remediating the issue.
SMCR continued to feature prominently. The FCA issued prohibition orders and fines against individuals who held senior management functions but failed to take reasonable steps to ensure compliance within their areas of responsibility. These cases reaffirm the regulator’s expectation that personal accountability is not theoretical, it must be demonstrated through active oversight, escalation, and documentation.
Several enforcement actions addressed market abuse, including insider dealing and market manipulation. The FCA highlighted failures by firms to detect suspicious activity through their surveillance systems, even where the conduct involved patterns that, in hindsight, should have triggered alerts. These cases illustrate both the evolving sophistication of misconduct and the limitations of outdated or insufficiently tuned detection tools.
ESMA published aggregated enforcement data for Q3, with National Competent Authorities (NCAs) across the EU reporting increased activity in several areas.
Reporting accuracy remained a central theme. NCAs identified systemic issues in how firms generate, validate, and submit transaction reports under MiFIR. Common failings included incomplete data fields, inconsistent use of identifiers, and delayed corrections. The cumulative impact of such errors continues to draw supervisory attention, particularly in cross-border contexts where consistency across jurisdictions is critical.
Market abuse surveillance was another area of focus. Several NCAs issued findings related to insufficient STOR filing, poor insider list management, and deficiencies in communications monitoring. Firms were reminded that MAR obligations require proactive, evidence-based compliance, not merely the existence of policies on paper.
A number of enforcement actions addressed best execution obligations under MiFID II. Regulators flagged concerns around execution venue selection, order handling, and the quality of RTS 27/28 reporting. Firms that could not demonstrate systematic monitoring and regular review of their execution policies were particularly exposed.
The SEC continued its high pace of enforcement during Q3, with several actions relevant to trade surveillance, reporting obligations, and senior officer accountability.
The SEC’s ongoing focus on electronic communications compliance resulted in further enforcement actions against firms that failed to capture, archive, or produce business-related communications across platforms such as WhatsApp, Signal, and personal email. Penalties in this area have escalated significantly, with several firms facing fines exceeding $50 million.
Multiple cases involved allegations of spoofing and layering, where firms’ surveillance systems either failed to detect the misconduct or flagged it but did not trigger adequate escalation. These cases highlight the importance of not only generating alerts but also ensuring that follow-up investigation and documentation meet regulatory expectations.
Reporting compliance remained under scrutiny. The SEC cited firms for failures in Consolidated Audit Trail (CAT) reporting, including late submissions, data inaccuracies, and gaps in coverage. Firms relying on legacy systems or fragmented reporting workflows were disproportionately represented in these actions.
MAS maintained an active enforcement posture in Q3, with particular emphasis on AML controls, market conduct, and technology risk management.
MAS issued penalties and supervisory actions against financial institutions for weaknesses in their anti-money laundering and counter-terrorism financing frameworks. Common issues included insufficient customer due diligence, failure to identify and report suspicious transactions, and inadequate screening processes. These cases underscore the importance of integrating AML monitoring with broader trade and transaction surveillance.
Enforcement actions in the market conduct space included cases involving unauthorised trading, misleading disclosures, and failures in post-trade monitoring. MAS reiterated its expectation that firms operating in Singapore maintain robust surveillance systems that are proportionate to the complexity and scale of their activities.
MAS continued to emphasise the role of technology in regulatory compliance. Firms were reminded of their obligations under the Technology Risk Management Guidelines, including expectations around system reliability, data integrity, and incident reporting. Several supervisory actions related to firms’ inability to demonstrate adequate controls over outsourced technology functions.
Q3 2025 reinforces several themes that have been building throughout the year. Regulators across jurisdictions are increasingly focused on whether firms can demonstrate that their compliance systems are not just present, but effective. Key trends include a continued emphasis on data quality and reporting accuracy, growing expectations for surveillance systems to detect complex and evolving misconduct, an expanding regulatory perimeter around communications capture and record-keeping, and personal accountability frameworks, such as SMCR and its international equivalents, being actively enforced.
For CCOs, Heads of Surveillance, and compliance leadership teams, the practical implication is clear: reactive compliance is no longer viable. Firms need integrated, auditable systems that can adapt to changing regulatory expectations and withstand enforcement scrutiny.
For a more detailed breakdown of Q3 enforcement actions, read our quarterly enforcement report here.
If your firm is looking to strengthen its compliance infrastructure, get in touch with eflow to learn how our platform supports trade surveillance, transaction reporting, and best execution across multiple jurisdictions.
