Merrill Lynch Slapped with $45 Million FCA Fine for EMIR Reporting Failures
First enforcement action under EMIR taken by UK financial watchdog over exchange-traded derivatives reporting.
The enforcement action is the first to come as a result of reporting obligations for exchange-traded derivatives set out under the European Markets Infrastructure Regulation (EMIR), introduced in 2014 following the global financial crisis to increase transparency within Europe’s derivatives markets.
Merrill Lynch International, part of Bank of America Merrill Lynch, was previously fined £13.3 million in 2015 for a similar infraction.
Within its final notice, the FCA said that the bank had failed to “have in place adequate oversight arrangements for the reporting of trading in exchange-traded derivatives under EMIR” and “to allocate adequate and sufficient human resource to undertake its obligations to report trading in exchange-traded derivatives under EMIR.”
“It is vital that reporting firms ensure their transaction reporting systems are tested as fit for purpose, adequately resourced, and perform properly,” said Mark Steward, FCA executive director of enforcement and market oversight. “There needs to be a line in the sand. We will continue to take appropriate action against any firm that fails to meet requirements.”
A spokesperson for Bank of America Merrill Lynch told WatersTechnology: “We are wholly committed to complying with all applicable regulatory requirements. When we discovered that certain trades had not been fully reported to a trade repository, as required following the introduction of EMIR, we immediately reported the matter to the FCA. We have re-evaluated and improved our related processes and can confirm that no clients were financially impacted as a result.”
With two months until the introduction of the revised Markets in Financial Instruments Directive (Mifid II), which further extends pre- and post-trade reporting obligations, the fine handed to Merrill Lynch by the FCA serves as a warning to the industry that capital markets firms must take the necessary steps to ensure that they comply with new and existing reporting regulations.
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