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FSA issues fines totalling £4.2m for transaction reporting failures

The Financial Services Authority has fined three firms a total of £4.2m for failing to provide accurate and timely transaction reports to the FSA.

The three firms are Credit Suisse – £1.75m fine, Getco Europe Limited – £1.4m and Instinet Europe Limited – £1.05m.  

Credit Suisse is a bank, Getco is a market maker trading on electronic markets, and Instinet is an agency broker.

Firms are required to have systems and controls in place to ensure they submit accurate data for reportable transactions by close of business the day after a trade is executed.

The FSA uses this data to detect and investigate suspected market abuse: insider trading and market manipulation.

All three firms were found to have committed multiple breaches that resulted in failures to provide transaction reports promptly and correctly to the FSA.  

Instinet was also found to be in breach of FSA Principles as the firm did not have adequate systems and controls in place to meet the transaction reporting requirements and failed to take adequate steps to review its processes and the accuracy of its transaction report data.

Each firm could have prevented the breaches by carrying out regular reviews of its data. Despite repeated reminders from the FSA during the course of 2007 and 2008, none of the firms did this.

Alexander Justham, director of markets, says: “Firms must meet their obligation to provide accurate and timely data.  Without quality data we cannot properly detect and investigate market abuse, identify market wide risks or have a comprehensive understanding of the activities of each firm.  This data is vital in our efforts to combat financial crime and we will continue to pursue firms that fail to provide quality data.  

“Firms and their management must ensure they implement and operate systems and controls that are able to ensure quality transaction reporting. The standard of regulatory reporting by these firms fell far short of what the FSA expects and requires.”  

The firms have taken steps to improve their processes and resolve the errors, resubmitting reports to the FSA where necessary.

The firms cooperated fully with the FSA in the course of the investigations and agreed to settle at an early stage. In doing so each firm qualified for a 30% discount. Without the discounts the total fines would have been £6m.



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