The eye-watering penalty, incurred through failings with 136 million transaction reports over a 10-year period, are a sobering call to investment banks to bring data management and reporting under tighter control
The news that the Financial Conduct Authority (FCA) has fined UBS AG an eye-watering £27.6m for transaction report failings over a 10-year-period will be an uncomfortable read for the banking and investment industry.
The penalty, which would have been closer to £40 million without a discount for UBS’s full co-operation in resolving the case, relates to inadequacies with 135.8 million transaction reports published between November 2007 and May 2017.
The FCA asserts that UBS failed to ensure the provision of ‘complete and accurate information’ in relation to some 86.7 million reportable transactions; it also unnecessarily reported 49.1 million transactions to the regulator. Failings were also identified in elements of UBS’s change management processes, its maintenance of the reference data used in its reporting, and its means of testing transaction reporting accuracy and completeness.
Commenting on the FCA’s high-profile intervention, Mark Steward, the regulator’s executive director of enforcement and market oversight, said: “If firms cannot report their transactions accurately, fundamental risks arise – including the risk that market abuse may be hidden.”
In this digital era, there is no excuse for inadequate data monitoring, management and reporting, when the tools exist to provide real-time records and a clear line of sight across all trading activity. “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,” Steward noted.
Fortunately, that’s something Inforalgo can help with.