FINRA Levies $1.3m Fine on Barclays Capital for Supervisory Failures

Regulatory lapses across Barclays Capital's Order Audit Trail System have resulted in a fine from FINRA.

The Financial Industry Regulatory Authority (FINRA), the largest independent regulatory authority in the US, has fined Barclays Capital Inc. a sum of $1.3 million for violations related to its systemic Order Audit Trail System (OATS) and other related supervisory failures, per a regulatory manifest.

FINRA’s regulatory regime that stipulates firms must properly transmit to OATS complete and accurate data relating to events across the lifecycle of an order, i.e. Reportable Order Events (ROEs).

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In the case of Barclays Capital, FINRA found a total of fifteen systematic issues that resulted in OATS reporting violations. For its part, Barclays Capital transmits more than 3.0 billion inaccurate or incomplete ROEs to OATS, which includes omitted special handling codes; inaccurate timestamps, execution quantities and member type codes, and duplicate or erroneous reports.

Furthermore, Barclays Capital failed to properly relay millions of ROEs to OATS, part of a supervisory system analysis that ultimately yielded the interface was not reasonably designed to achieve compliance with its OATS reporting obligations. Consequently, FINRA has lobbied a $1.3 million fine, which Barclays Capital has consented to, though the group does not confirm or deny the charges.

According to Thomas Gira, Executive Vice President and Head of Market Regulation at FINRA, in a recent statement on the verdict: “When firms fail to transmit OATS data or transmit inaccurate or incomplete data to OATS, market integrity is compromised because potential violative conduct, including manipulative activity and customer harm, may be obscured. OATS data is essential to FINRA’s automated equities surveillance program and is therefore critical to investor protection.”

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