FCA fines UBS £27.6m for reporting failures
20 Mar 2019
Swiss bank UBS has been fined £27.6m by the Financial Conduct Authority (FCA) for failings relating to 135.8m transaction reports filed over a ten-year period, which breached the regulator’s rules regarding the information required to identify potential market abuse and financial crime
20 Mar 2019
Between November 2007 and May 2017 UBS failed to ensure it provided complete and accurate information in relation to approximately 86.67m reportable transactions. It also erroneously reported 49.1m transactions to the FCA, which were not, in fact, reportable.
The FCA also found 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.
Mark Steward, FCA 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.'
UBS agreed to resolve the case and so qualified for a 30% discount in the overall penalty. Without this discount, the FCA would have imposed a financial penalty of £39.4m.
A UBS spokesman said: ‘Although there was never any impact on clients, investors or market users the bank has made significant investments to enhance its transaction reporting systems and controls.’
A transaction report is a data set submitted to the FCA that relates to an individual financial market transaction which includes, but is not limited to, details of the product traded, the firm that undertook the trade, the trade counterparty, the client (where applicable) and the trade characteristics, price, quantity and venue.
The FCA’s rules on transaction reporting were based on the EU markets in financial instruments directive (2004/39/EC) (MiFID) from 5 November 2007 until 2 January 2018. MiFID II took effect from 3 January 2018 and extended transaction reporting requirements to include additional instruments.
To date, the FCA has fined 12 other firms for MiFID transaction reporting breaches: Merrill Lynch International, Deutsche Bank, Royal Bank of Scotland, James Sharp & Co, Plus500UK, City Index Limited, Société Générale, Commerzbank, Instinet Europe Ltd, Getco Europe Ltd, Credit Suisse and Barclays Capital Securities Ltd and Barclays Bank.
Report by Pat Sweet