The Financial Conduct Authority has fined a 13th firm for failings relating to transaction reporting. UBS has been fined in relation to failings surrounding 135.8 million transaction reports carried out between November 2007 and May 2017.
The total penalty fine for UBS is £27.6m; this is with a 30% reduction as UBS agreed to resolve the case. Without the discount the firm would have been facing a £39,427,795 financial penalty.
What is transaction reporting?
Transaction Reporting is a set of data that is submitted to the FCA that relates to an individual market transaction. The type of data provided in each transaction report includes, but is not limited to, details of the product being traded, the firm that undertook the trade as well as the counter party in the trade, where applicable the client and the characteristics of the trade: price, quantity and venue.
Why does the FCA place so much importance on transaction reporting?
The FCAs rules on transaction reporting came from the EU Markets in Financial Instruments Directive (MIFID) between 5th November 2005 and 2nd January 2018. This was then updated from the 3rd of January 2018 when MIFID II took effect.
Effective Market oversight relies on the complete, accurate and timely reporting of transactions. This information helps the FCA to effectively supervise firms and markets. It also helps the FCA identify any potential instances of market abuse and combat financial crime.
All these factors are aimed at helping to restore the public trust in the banking sector especially after the financial crisis of 2008. So if these reports are not completed correctly it undermines the whole process of building back the trust that was damaged.
The FCAs Executive Director of Enforcement and Market Oversight said:
‘Firms must have proper systems and controls to identify what transactions they have carried out, on what markets, at what price, in what quantity and with whom. If firms cannot report their transactions accurately, fundamental risks arise, including the risk that market abuse may be hidden.’
The findings by the FCA found that UBS had failed to ensure that complete and accurate information had been reported in relation to approximately 86.67m reportable transactions. It had also erroneously reported 49.1m transactions to the FCA, which were not, in fact, reportable. So over the 9 and a half year period UBS made 135.8m errors in its transaction reporting, breaching FCA rules.
The FCA also found out that UBS failed to take reasonable care to organise and control its affairs responsibly and effectively in respect of its transaction reporting. These failings related to aspects of UBS’s change management processes, its maintenance of the reference data used in its reporting and how it tested whether all the transactions it reported to the FCA were accurate and complete.
You can read more about what the FCA has had to say about the fine here.
To find out more details on transaction reporting please follow the link below.