The UK’s Financial Services Authority (FSA) has fined Barclays Capital Securities and Barclays Bank £2.45 million for failing to provide accurate transaction reports to the regulator and for “serious weaknesses in systems and controls in relation to transaction reporting”.
The FSA said it discovered discrepancies in Barclays’ data while reviewing a suspected incident of market abuse by a third party. A subsequent review of Barclays’ transaction reporting arrangements revealed that it did not have adequate systems and controls in place to meet the transaction reporting requirements as well as a substantial number of errors in the data submitted to the FSA.
Firms are required to submit data for reportable transactions by close of business the day after a trade is executed. The regulator uses this data to detect and investigate suspected market abuse such as insider trading and market manipulation.
“Complete and accurate transaction reports are an essential component of the FSA’s market monitoring work. Barclays’ reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse,” said Alexander Justham, FSA director of markets, in a statement. “The penalty imposed on Barclays is significantly higher than previous penalties imposed for transaction reporting errors. This reflects the serious nature of Barclays’ breaches and is a warning to other firms that the FSA will not tolerate inadequate systems and controls.”
According to the FSA, Barclays has taken a number of steps to address the concerns raised including commissioning a review of its transaction reporting process and committing extensive resources to improve its processes and resolve the errors.
Because the firm cooperated fully with the FSA’s investigation and agreed to settle at an early stage, its fine was discounted by 30%. It would otherwise have been £3.5 million.