FCA issues first fine for transaction reporting failures under MiFIR

To monitor, detect and disrupt market abuse effectively, the FCA needs to receive complete, accurate and timely transaction reports.

Between 1 October 2022 and 31 March 2023, Infinox failed to submit transaction reports for single-stock contracts for difference (CFD) trades executed through one of its corporate brokerage accounts. Trades executed through this corporate brokerage account accounted for the majority of this business line.  

Although Infinox identified its failure to submit these transaction reports following a third-party review, it did not proactively report the breach to the FCA. The FCA independently identified this discrepancy in transaction data submitted by Infinox. The breach highlighted weaknesses in Infinox’s transaction reporting systems and controls for a high-risk investment product.  

The FCA has fined a number of firms for transaction reporting failures. However, this is the first enforcement action against a firm for a breach of transaction reporting requirements since they became law under the UK Markets in Financial Instruments Regulation (MiFIR).  

Steve Smart, joint executive director of enforcement and market oversight, commented: ‘As a data-led regulator it is vital that firms submit accurate and timely transaction reports, and promptly bring any failures to our attention. Infinox failed to do this, which meant market abuse could have flown under the radar and risked the integrity of the market.

‘Our specialist teams constantly monitor market data in real time to track any signs of misconduct.’ 

Notes to editors

1. Final Notice: Infinox Capital Limited[2].
2. Infinox agreed to resolve the case at an early stage and qualified for a 30% discount on the penalty imposed. Without this discount, the fine would have been £141,800.
3. Infinox breached Article 26(1) of the UK Markets in Financial Instruments Regulation (Regulation (EU) No 600/2014) (MiFIR).
4. Article 26(1) MiFIR provides that: ‘Investment firms which execute transactions in financial instruments shall report complete and accurate details of such transactions to the competent authority as quickly as possible, and no later than the close of the following working day.’
5. CFDs are derivative instruments that investors use to speculate on the rise and fall in price of a wide range of assets without owning the asset itself. They are most commonly offered in the UK on an over-the-counter basis by firms acting as counterparty (i.e., as principal) to the client’s trade. They allow investors to gain indirect exposure to the price movements in an underlying index, single stock equity, commodity, FX pair or cryptocurrencies. Single-stock CFDs therefore allow investors to speculate on the rise and fall in price of a single stock rather than an index or basket of stocks.
6. Transaction reports are submitted to the FCA when a transaction is executed in a financial instrument. Transaction reports include, but are not limited to, information on the financial instrument traded, the price and the participants involved. Read more information about transaction reporting[3].
7. The FCA uses the information from transaction reports for:
   • monitoring market abuse
   • firm supervision
   • market supervision 
   • sharing with certain external parties, such as the Bank of England