Monday, 23 October 2017

Financial Conduct Authority fines Merrill Lynch £34.5m for reporting failures



The Financial Conduct Authority has imposed a £34.5m fine on Merrill Lynch International.
 
The City watchdog said the bank was the first to be penalised under rules aimed at boosting risk transparency after the financial crisis.
 
 
It said MLI failed to report 68.5 million exchange traded derivative transactions over two years until February last year.


These are essentially bets - an arrangement or product - which derive value from real assets such as commodities or currencies that are guaranteed against default.


Mark Steward, the FCA's executive director of enforcement and market oversight, said: "Effective market oversight depends on accurate and timely reporting of transactions."


He added: "It is vital that reporting firms ensure their transaction reporting systems are tested as fit for purpose, adequately resourced and perform properly.


"There needs to be a line in the sand. We will continue to take appropriate action against any firm that fails to meet requirements."
 
 
The FCA said MLI would have been fined £49.3m had it not agreed to settle at an early stage in its investigation.


The regulator said the company had been "open and co-operative" and quickly taken steps to remediate the breach.


Bank of America Merrill Lynch said it had informed the FCA of the breach.


Its statement said: "We are wholly committed to complying with all applicable regulatory requirements.


"When we discovered that certain trades had not been fully reported to a trade repository, as required following the introduction of EMIR (European Markets Infrastructure Regulation), we immediately reported the matter to the FCA.


"We have re-evaluated and improved our related processes and can confirm that no clients were financially impacted as a result."




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