FCA fines Merrill Lynch £34.5m over reporting failures

The Financial Conduct Authority has slapped Merrill Lynch with a £34.5m fine for failing to report almost 69 million exchange traded derivative transactions between February 2014 and February 2016.

This is the first enforcement action against a business by the watchdog over failing to report transactions of this kind.

The requirement to report on exchange traded derivative transactions was introduced in the European Markets Infrastructure Regulation legislation that came into force following the 2008 financial crisis, and was aimed at improving transparency in financial markets and helping authorities assess and address financial risk.

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.”

Merrill Lynch agreed to settle early in the investigation, leading to the overall fine being reduced by 30%, from £49.3m. The FCA confirmed that the US bank had been “open and co-operative” during the investigation.

The bank stated: “When we discovered that certain trades had not been fully reported to a trade repository, as required following the introduction of EMIR, we immediately reported the matter to the FCA.”

Merrill Lynch was previously fined by the FCA on two separate occasions; £150,000 in 2006 over share trading reporting failures and then £13.28m in 2015 for failing to accurately report transactions over a seven year period.

PwC was recently fined $1m over their audits of Merrill Lynch.