LME Imposes £265,000 Fine on Mizuho for Regulatory Breach

The London Metal Exchange (LME) has imposed a fine of £265,000 (approximately $356,000) on Mizuho Securities USA for failing to comply with its regulatory requirements. This decision, announced on October 27, 2023, follows an investigation into the firm’s alleged misconduct regarding the reporting of over-the-counter (OTC) positions.

According to the LME, Mizuho Securities USA, classified as a Category 2 member, neglected to report OTC positions for two of its affiliates between September 5, 2022, and December 20, 2024. Exchange regulations mandate that all members provide weekly updates concerning the OTC metals business of their clients, affiliates, or themselves.

The LME indicated that Mizuho’s failure stemmed from “a gap in its internal system and controls.” This oversight represents a significant breach of the firm’s obligations to establish and maintain adequate risk management systems.

In a notice issued by Joe Morrison, the LME’s head of market surveillance, it was confirmed that the fine is part of a settlement that has received approval from the LME’s enforcement committee. Mizuho has since taken steps to rectify the issues that led to the breach, implementing remedial actions to enhance its compliance with LME rules.

Mizuho declined to provide any comments regarding the fine or the circumstances surrounding it. This incident underscores the importance of stringent compliance measures within financial institutions, especially those operating in complex markets like metals trading.

As the landscape of financial regulation continues to evolve, firms are reminded of the critical need for robust internal controls and timely reporting practices to avoid penalties and maintain trust in the markets.