FCA fines Merrill Lynch for transaction reporting failures

The UK financial regulator has issued its largest ever fine for transaction reporting failures to Merrill Lynch International.

The Financial Conduct Authority slapped the UK broking and dealing arm of Bank of America Merrill Lynch with a £19m fine, which was given a 30% reduction to £13.29m due to the bank agreeing a quick settlement.

Merrill Lynch had incorrectly reported more than 35m transactions, the FCA said, and failed to report another 121,387 transactions between November 2007 and November 2014.

It had been repeatedly warned in private by the regulator in 2002 and was issued with a £0.6m fine in 2006.

“Proper transaction reporting really matters," said the FCA's acting director of enforcement and market oversight, Georgina Philippou. "Merrill Lynch International has failed to get this right again – despite a private warning, a previous fine, and extensive FCA guidance and enforcement action in this area."

The fact the fine was the highest ever imposed for transaction reporting failures was, the regulator said, due to "the severity of MLI’s misconduct, failure to adequately address the root causes over several years despite substantial FCA guidance to the industry and a poor history of transaction reporting compliance".

The FCA has used a penalty of £1.50 per line of incorrect or non-reported data for the first time rather than the £1.00 per line used in the three most recent transaction reporting cases "because past fines have not been high enough to achieve credible deterrence".

Philippou said the size of the fine "sends a clear message that we expect to be heard and understood across the industry".

“Accurate and timely reporting of transactions is crucial for us to perform effective surveillance for insider trading and market manipulation in support of our objective to ensure that markets work well and with integrity.”