The U.K.’s Financial Conduct Authority today fined Merrill Lynch International a record £13.2 million ($19.8 million) for inaccurately reporting more than 35,034,810 transactions and for failing to report another 121,387 transactions over several years. The size of the fine marks the highest ever imposed for transaction reporting failures.
Under FCA rules, transaction reports must include, but is not limited to, details of the product traded, the firm that undertook the trade, the trade counterparty, and the trade characteristics—such as buy/sell indicator, price, quantity, and trading venue.
According to the FCA, Merrill Lynch failed on numerous occasions between 2007 and 2014 to accurately report millions of transactions. This misconduct continued, despite a poor history of transaction reporting compliance, consisting of a Private Warning issued in 2002 and a fine of £150,000 ($225,000) in 2006.
“Proper transaction reporting really matters,” Georgina Philippou, FCA acting director of enforcement and market oversight, said in a statement. “Merrill Lynch International has failed to get this right again—despite a Private Warning, a previous fine, and extensive FCA guidance and enforcement action in this area.”
The FCA said it decided to impose an increased fine of £1.50 ($2.25) per line of incorrect or non-reported data, as opposed to £1.00 per line imposed in the last three transaction reporting cases, “because past fines have not been high enough to achieve credible deterrence.”
To date, the FCA has fined 11 other firms for transaction reporting breaches. These firms are Deutsche Bank, Barclays, Credit Suisse, Instinet, Getco, Commerzbank, Société Générale, City Index, James Sharp & Co, Plus500UK, and RBS.
Because Merrill Lynch agreed to settle at an early stage of the investigation, it qualified for a 30% discount. Were it not for this discount, the FCA said it would have imposed a financial penalty of £19 million ($28.5 million).