UK watchdog fines Merrill Lynch $45.5m for reporting failure
LONDON: Britain’s financial watchdog has fined Bank of America’s Merrill Lynch investment banking arm £34.5 million ($45.5 million) for its third transaction reporting failure in just over a decade.
The Financial Conduct Authority said the bank failed to have adequate oversight arrangements, undertake testing or allocate enough staff to properly meet reporting obligations for derivatives trading between February 2014 and February 2016.
The bank agreed to settle at an early stage in the investigation and received a 30 per cent cut in the overall fine of 49.32 million pounds, the FCA said in a statement on Monday.
European Union regulators toughened reporting requirements in the derivatives market following the 2007-09 financial crisis, which left them unable to see easily which banks were exposed to large, risky positions, creating uncertainty in markets.
Banks now have to report their derivatives trades in a timely way so that regulators can spot uncontrolled risks building up.
It was the first enforcement action against a firm for failing to report details of derivatives traded on an exchange under the EU’s European Markets Infrastructure Regulation (EMIR), the FCA said. It is vital that reporting firms ensure their transaction reporting systems are tested as fit for purpose, adequately resourced and perform properly. There needs to be a line in the sand,” said Mark Steward, the FCA’s executive director for enforcement.