The Securities and Futures Commission (SFC) of Hong Kong fined the bank HK$6m (£460k, $770k) after it found internal control failures relating to the detection and prevention of unauthorized trading activities and the conduct of its emerging markets rates business.
It follows a reprimand received by the bank in Qatar at the end of March. An investigation by the Qatar Financial Centre Regulatory Authority found compliance with competency requirement failures which the regulator said was due to an “insufficient” training programme.
The latest disciplinary action in Hong Kong comes after the regulatory body launched an “urgent” investigation into the bank after discovering unauthorized trading activities by one of its emerging markets rates traders, Shirlina Tsang Pui Yu.
RBS had contacted the SFC to report its concerns about Tsang after discovering anomalies in her trading, later found to be part of a three-year stint of unauthorised trading which cost the bank a total of £24.4m.
Tsang had concealed the losses by cancelling and amending fictitious bonds and futures trades in RBS’s internal systems.
The SFC said RBS’s management and control over its emerging markets rates desk were “seriously inadequate” in their failure to prevent Tsang’s misconduct.
Its investigation also found inadequate and ineffective front office supervision, an absence of controls over the process for independent price verification, computerised system failures and a lack of processes to monitor trades conducted outside RBS’s office and normal business hours.
Mark Steward, executive director of enforcement at SFC, said: “RBS acted quickly in alerting the SFC on a Saturday afternoon which in turn led to action being taken that prevented Tsang from leaving Hong Kong.
“This deserves substantial credit and is the reason why today’s sanctions are not heavier ones. The SFC expects firms to report misconduct concerns immediately, as in this case.”
The SFC said that when issuing its disciplinary action it took into account RBS’s full co-operation with the SFC, its protection of customers, its clean disciplinary record in the area and its new governance structures .
In January, the SFC began a pubic consultation on plans to amend its real estate investment trustrules to create greater investment flexibility.
The body said the proposals would bring its real estate investment trust regime “broadly in line” with regions such as Singapore, Malaysia, the US, and Australia.
