The London branch of German investment bank Commerzbank has become latest firm to be fined by the UK Financial Services Authority (FSA) for inadequate transaction reporting.
Commerzbank will have to pay £595,000 after the regulator found that the firm had either failed to report or reported inaccurately almost all of its reportable transactions over a two-year period between 5 November 2007 and 20 November 2009.
According to the final notice published by the UK regulator, issues with Commerzbank’s transaction reporting system, Mitre, were identified soon after MiFID’s implementation in November 2007. However, no steps were taken to solve the problems, despite specific requests by the FSA for Commerzbank to check its data quality.
Transaction reporting – trading data given to a regulator on a T+1 basis – is used by the FSA to detect market abuse practices such as insider trading and market manipulation. It includes information such as details of the product traded, the firm that undertook the trade, the trade counterparty and trade characteristics such as buy/sell identifier, price and quantity.
“Complete and accurate transaction reports are an essential component of the FSA’s market monitoring work,” said Alexander Justham, director of markets at the FSA. “Commerzbank’s reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse. Firms and their management must ensure they submit quality transaction reporting data.”
The bank has taken steps to address its data issues, which include a review of its transaction process and committing resources to resolve the errors. Commerzbank cooperated fully with the FSA, which meant its fine was subject to a 30% discount. Without the discount, the fine would have been £850,000.
Commerzbank is the fourth trading firm this month to be fined by the FSA for inadequate transaction reports. Investment bank Credit Suisse, agency broker Instinet and electronic market making firm GETCO Europe were fined a total of £4.2 million for similar breaches on 8 April.