The British financial markets regulator, the Financial Conduct Authority (FCA), announced today that Deutsche Bank AG London Branch has been fined £4,718,800 for incorrectly reporting transactions between November 2007 and April 2013. According to the FCA, Deutsche failed to properly report 29,411,494 Equity Swap Contracts for Difference (CFD) transactions.
The failure, which affected all Deutsche’s Equity Swap CFD transaction reports during this period, reportedly breaches FCA rules on transaction reporting. By withholding these reports from the FCA, Deutsche had no transparency and if something illegal had taken place the regulator would have been left in the dark.
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Tracey McDermott, the FCA’s Director of Enforcement and Financial Crime, said: “Effective market surveillance is critical to maintain the integrity of our markets and depends on accurate and timely reporting of transactions. Deutsche is a major market participant responsible for reporting millions of transactions every year. We have repeatedly highlighted the importance of accurate transaction reporting and taken enforcement action against a number of firms. There is simply no excuse for Deutsche’s failure to get this right. Other firms should be in no doubt about our continued focus on this issue.”
The FCA’s overall objective is to ensure that markets work well and with integrity. Accurate and complete transaction reporting by firms is an essential tool in delivering this objective. The FCA explained it uses these types of company reports in a number of ways, including identifying and investigating suspected market abuse, for example, insider trading and market manipulation. The FCA says that whenever it sees any evidence of firms not acting properly it will not hesitate to act, but without honest and complete reporting from firms it will have no such evidence.
The FCA said they are particularly concerned because they have already provided extensive guidance to firms on how to submit and check these reports, have taken action against several other firms, and have previously issued Deutsche with a private warning in relation to other similar transaction reporting failures. The FCA says that the size of the fine reflects the very significant number of misreported transactions. However, Deutsche agreed to settle at an early stage of the investigation, receiving a 30% reduction of their fine.