FCA fines Goldman Sachs £34.4m for transaction reporting failures

The UK’s Financial Conduct Authority (FCA) has fined Goldman Sachs International £34.3m for failures with transaction reporting.

Goldman Sachs received the fine after it failed to provide ‘complete, accurate and timely information in relation to approximately 213.6m reportable transactions.’ In addition to this, the bank mistakenly reported 6.6 million transactions to the FCA, which were not reportable.

These errors have spanned nine and a half years, resulting in 220.2 million errors in transaction reporting rules.

The FCA also found GSI had not taken ‘reasonable care’ to organise and control its transaction reporting affairs responsibly and effectively. Specifically, these relate to its change management processes, counterparty reference data maintenance and monitoring of transactions testing.

Transaction reporting helps the FCA to underwrite market integrity and supervise firms and markets. A major benefit of them is they can help identify potential instances of market abuse and help combat financial crime.

When a transaction report is submitted to the FCA, it provides details around the product traded, firms involved in the trade, trade counterparty, the client and information on the trade, such as price, and quantity. The FCA uses this to monitor for market abuse, monitor both the firm and market, and provide the information to external parties like the Bank of England, the FCA said.

The regulators transaction monitoring rules were based on 2007’s MiFID, and adapted last year for MiFID II, which requires reporting of additional instruments.

Goldman Sachs agreed to resolve the case and in doing so, were permitted a 30 per cent discount on the overall penalty. Had there not been a discount, the fine would have been £49m.

FCA executive director of enforcement and market oversight Mark Steward said, “The failings in this case demonstrate a failure over an extended period to manage and test controls that are vitally important to the integrity of our markets. These were serious and prolonged failures.

“We expect all firms will take this opportunity to ensure they can fully detail their activity and are regularly checking their systems so any problems are detected and remedied promptly, unlike in this case.”

To date, the FCA has fined 13 other firms for similar MiFID transaction reporting breaches, including UBS, Merrill Lynch International, Deutsche Bank AG, Royal Bank of Scotland, Société Générale, Commerzbank AG, Credit Suisse and Barclays Bank. ​​​​​​​


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