Release Date: 21st August 2014
To access the original FCA document, click here.
Summary
Deutsche Bank AG’s London Branch has been fined £4.7 million by the Financial Conduct Authority (FCA) for failing to accurately report 29,411,494 Equity Swap Contract for Difference (CFD) transactions from November 2007 to April 2013. This error was due to a coding issue which incorrectly reversed the buy/sell indicator for all reported equity swap CFD transactions, significantly affecting the integrity of the data provided during this period.
The fine imposed on Deutsche Bank reflects the gravity of the breach and its potential impact on market surveillance and integrity. Accurate transaction reporting is crucial as it helps regulatory bodies like the FCA detect and investigate market abuses such as insider trading and market manipulation. The FCA has emphasised that accurate and complete transaction reporting by firms is vital for maintaining the integrity of markets and ensuring they function effectively.
Tracey McDermott, FCA’s director of enforcement and financial crime, highlighted the importance of firms meeting their transaction reporting obligations. She noted that the FCA has repeatedly stressed the need for accurate reporting and has taken enforcement action against several firms for failures in this area. McDermott pointed out that there is “no excuse” for Deutsche’s failures, especially given the bank’s significant role in the market and previous warnings issued to it regarding similar issues.
The size of the penalty also reflects the substantial number of misreported transactions and the fact that Deutsche Bank settled at an early stage of the FCA’s investigation, receiving a 30% reduction in their fine. Without this discount, the fine would have been £6,741,215.
This case serves as a critical reminder to other firms of the importance of robust systems and controls for transaction reporting. Firms must ensure they adhere to regulatory requirements and rectify any identified issues promptly to avoid similar punitive actions. The FCA continues to focus on this area, indicating that transaction reporting will remain a significant aspect of regulatory compliance checks. Firms should rigorously test their reporting systems and promptly address any identified flaws to ensure compliance with FCA regulations and safeguard market integrity.
Back to the Dear CEO letter archives.