Merrill Lynch International (MLI) has been fined £34,524,000 by the Financial Conduct Authority (FCA) for failing to report 68.5 million exchange traded derivative transactions between 12 February 2014 and 6 February 2016.
This is the first enforcement action against a firm for failing to report details of trading in exchange traded derivatives, under the European Markets Infrastructure Regulation (EMIR), and reflects the importance the FCA puts on this type of reporting.
Reporting exchange traded derivative transactions helps authorities assess and address the risk inherent in financial systems caused by a lack of transparency. The reporting requirement was one of the key reforms introduced following the financial crisis in 2008 to improve transparency within financial markets.
While MLI were open and co-operative in assisting in the FCA’s investigation and quickly took steps to remediate the breach, MLI were the subject of two earlier and related transaction reporting cases.
Mark Steward, FCA Executive Director of Enforcement and Market Oversight said: "Effective market oversight depends on accurate and timely reporting of transactions. The obligations under EMIR, as with MiFID, are key aspects of such oversight.
“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.”
MLI agreed to settle at an early stage of the investigation and received a 30% reduction in their overall fine. Without this discount the fine would have been £49,320,000.
Notes to editors
- Final notice for Merrill Lynch International[1].
- Previous MLI Final Notices[2].
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.