UBS  

UBS fined £27.6m over Mifid failings

UBS fined £27.6m over Mifid failings

The regulator has fined UBS AG almost £30m for transaction reporting failures spanning a decade. 

The £27,599,400 fine relates to a failure by UBS to provide complete and accurate information in relation to almost 90m transactions. 

Between November 2007 and May 2017, the firm also reported 49m transactions to the FCA in error that should not have been reported.

Altogether, over a period of nine and a half years, UBS made 136m errors in its transaction reporting, breaching FCA rules.

The FCA also found that UBS had failed to take reasonable care to organise and control its affairs responsibly in respect of its transaction reporting.  

These failings related to aspects of UBS’s change management processes, its maintenance of the data used in its reporting and how it tested whether all the transactions it reported to the FCA were accurate and complete. 

According to the FCA, when a firm reports its transactions, it may do so through an Approved Reporting Mechanism a system that complies with specific requirements detailed in the Markets in Financial Instruments Directive (Mifid).

The inaccurate reports provided details of reportable transactions with various errors, such as using an incorrect identifier for the counterparty or reporting an inaccurate execution time for a transaction, the FCA stated. 

UBS agreed to resolve the case and so qualified for a 30 per cent discount in the overall penalty. Without this discount, the FCA would have imposed a financial penalty of £39,427,795.

Mark Steward, FCA executive director of enforcement and market oversight, said: "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."

The FCA’s rules on transaction reporting were based on the 2007 EU Markets in Financial Instruments Directive, which was succeeded by Mifid II last year and extended to strengthen investor protection.

A transaction report is data submitted to the FCA that relates to a financial market transaction and includes details of the product traded, the firm that undertook the trade, the trade counterparty, the client, and elements such as price, quantity and venue.

The FCA uses this information to supervise firms and monitor for market abuse. It also shares some data with external parties, such as the Bank of England.

To date, the FCA has fined 12 other firms for Mifid reporting breaches: Merrill Lynch International, Deutsche Bank, Royal Bank of Scotland, James Sharp & Co, Plus500UK, City Index Limited, Société Générale, Commerzbank AG, Instinet Europe Limited, Getco Europe Limited, Credit Suisse, and Barclays Capital Securities Limited and Barclays Bank Plc.