Merrill Lynch first to fall foul of UK’s EMIR reporting rules
23 October 2017 London
Image: Shutterstock
Merrill Lynch International has become the first bank to be reprimanded by the UK’s Financial Conduct Authority (FCA) for failing to report exchange traded derivative transactions under the European Markets Infrastructure Regulation (EMIR).
The bank accepted a £34.52 million penalty relating to 68.5 million unreported transactions between February 2014 and February 2016.
Merrill Lynch International accepted a settlement early on in the investigation, thereby securing a 30 percent penalty reduction, from the original £49.32 million fee.
The FCA said the action “reflects the importance the FCA puts on this type of reporting”.
The regulatory watchdog stated that 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.
In a statement on the enforcement, the FCA said: “While Merrill Lynch International were open and cooperative in assisting in the FCA’s investigation and quickly took steps to remediate the breach, Merrill Lynch International 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 Markets in Financial Instruments Directive, 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.”
The bank accepted a £34.52 million penalty relating to 68.5 million unreported transactions between February 2014 and February 2016.
Merrill Lynch International accepted a settlement early on in the investigation, thereby securing a 30 percent penalty reduction, from the original £49.32 million fee.
The FCA said the action “reflects the importance the FCA puts on this type of reporting”.
The regulatory watchdog stated that 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.
In a statement on the enforcement, the FCA said: “While Merrill Lynch International were open and cooperative in assisting in the FCA’s investigation and quickly took steps to remediate the breach, Merrill Lynch International 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 Markets in Financial Instruments Directive, 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.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
