Credit Suisse will pay a $1.5 million penalty after the US derivatives trading watchdog found three of its registered swap dealers reported inaccurate swap data over a period of five years.
The US Commodities and Futures Trading Commission (CFTC) found that the reporting error, which was caused by a single issue in a reporting engine, impacted nearly 91% of the bank’s swap dealers’ reportable equity swap positions, and 14% of their overall reportable swaps.
Since becoming provisionally registered swap dealers, the CFTC said the three entities failed to report the ‘daily mark’ of swap transactions when reporting to a swap dealer repository between 2013 and 2018. Instead, they reported the mark-to-market notional value of the underlying equity.
The regulator added that the Credit Suisse entities discovered the reporting error, which affected roughly 22 million messages to the repository, in October 2018 and solved the issue by mid-December the same year. The historical record of the inaccurate reports was also corrected in August 2020.
Several other major respondents have been served penalties for similar reporting failures in the last few years. In June last year, Germany’s Deutsche Bank paid a $10 million settlement for swap reporting failures following a platform outage in 2016 and alleged spoofing activity that took place in 2013.
In Europe, a recent report by ACA Group found that almost all firms were reporting derivatives transactions incorrectly, with 87% of firms not realising there was a problem. A non-standardised approach to regulatory reporting has led to confusion and errors in the past.
In March 2020, several major trade associations banded together to publish a set of guidelines aimed at standardising reporting of derivatives transactions under the EMIR Regulation in order to counteract reporting failures.