The Financial Services Authority has written to chief executives of firms and banks warning them to review internal transaction reporting procedures and systems. The FSA’s letter states firms have a role in detecting and investigating potential market abuse by tracking the reports. FSA supervisors will be taking an increased interest in this area and will see failure to comply as a serious breach, said David Cliffe, spokesman. Cliffe said the onus is on firms to apply transaction reporting obligations listed in Chapters 15 and 17 of the FSA supervision manual.
The warning follows a recent spate of FSA enforcement actions that have included fines. HSBC was fined £100,000 ($177,000) due to a failure by the bank’s retail stock brokerage service to ensure the accuracy of transaction reports last year, according to the FSA enforcement notice (CR, 12/19). The FSA also fined Bear Stearns £40,000 ($71,000) and UBS £100,000 for transaction reporting failings.
Firms are taking notice. Mizuho in London has begun reviewing its reporting structures, said Jeremy Boulton, head of compliance. Boulton said the fines show firms have not been paying enough attention to the accuracy of their transaction reporting, Boulton said. “I’m delighted the message is getting across,” Cliffe noted. The FSA’s letter added that making provisions now will also help U.K. firms’ implementation of the Markets in Financial Instruments Directive, which covers transaction reporting.