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Transaction Reporting Failings: FCA fines UBS £27.6million

25th March 2019

Transaction Reporting Failings: FCA fines UBS £27.6million

Last week the Regulator fined UBS AG (UBS) £27,599,400 for failings relating to almost a decade’s worth of transaction reports.  

A total of 135.8 million transaction reports by UBS were found to have been made inaccurate and incomplete or not on time during the period of 5th November 2007 and 24th May 2017.

Of that number, approximately 86.67m reportable transactions were found to be inaccurate or incomplete, such as incorrect identifier codes for the party or transaction being used, whilst another 49.1m transactions were found to have been erroneously reported to the FCA since they were not required to have been reported.

The failings in UBS’s transaction reports breached FCA rules and caused the FCA’s Executive Director of Enforcement and Market Oversight, Mark Steward, to comment:

“Firms must have proper systems and controls to identify what transactions they have carried out, on what markets, at what price, in what quantity and with whom. If firms cannot report their transactions accurately, fundamental risks arise, including the risk that market abuse may be hidden.”

As stressed by the FCA, complete, accurate and timely reporting of transactions is needed for effective market oversight by the regulator, since this information helps the FCA to supervise both firms and markets. Specifically, transaction reporting can help to identify potential occurrences of market abuse and help the regulator to combat financial crime.

FCA’s additional findings:

In investigating the transaction reporting by UBS, the FCA concluded that UBS failed to take reasonable care to organise and control its affairs responsibly and effectively in respect of its transaction reporting. Specifically, these failings concerned aspects of:

• UBS’s change management processes
• UBS’s maintenance of reference data used in reporting; and
• How UBS tested whether all the transactions it reported to the FCA were accurate and complete.

Since UBS agreed to resolve the case, its overall fine was reduced by 30%, otherwise it would have received a financial penalty of £39,427,795.

Message to Firms

As those within the financial markets over this period will remember, there was widescale regulatory change when the EU’s Markets in Financial Instruments Directive (MiFID) came into effect from 1st November 2007 (until 2nd January 2018 when MiFID II was implemented) and with it came new transactional reporting requirements (effective from 5th November 2007).

This fine is a stark reminder to firms that they must ensure they assess their existing arrangements and and prepare for any upcoming regulatory changes to ensure that they remain compliant in an ever-evolving regulatory landscape.

Compound Growth has a wealth of experience with all manner of regulatory reporting requirements. If you should like to arrange an independent review of your transactional reporting or have any concerns over your firm’s current arrangements, we would be happy to discuss how our experienced consultants might help. Simply drop us an email or contact us by phone.

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