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Merrill Lynch Fined $45 Million by U.K. for Failing to Report Transactions

Updated on
  • Bank didn’t report 68.5 million transactions in 2-year period
  • Fine is the first of its kind under EU transparency rules

Bank of America Corp.’s Merrill Lynch was fined 34.5 million pounds ($45.5 million) for failing to report two years’ worth of exchange traded derivatives transactions, making the bank the first in the U.K. to pay a penalty on that type of trades under the European Markets Infrastructure Regulation.

The bank failed to report 68.5 million exchange traded derivative transactions, starting in Feb. 2014, the U.K.’s Financial Conduct Authority said Monday. European transparency rules came into force from 2012 to reduce risks in the derivatives market, and force banks to report the trades. Bank of America cut the fine by settling at an early stage of the probe.

The FCA has penalized several firms for reporting and systems and controls failures in recent years. Last week, Rio Tinto Plc was fined 27.4 million pounds for breaching listing disclosure rules when it acquired a Mozambique asset in 2011. In January, Deutsche Bank AG was fined 163 million pounds for serious failings around its anti-money laundering controls that allowed it to transfer about $10 billion from unknown clients out of Russia to offshore accounts.

“Effective market oversight depends on accurate and timely reporting of transactions,” Mark Steward, FCA executive director of enforcement and market oversight, said. “It is vital that reporting firms ensure their transaction reporting systems are tested as fit for purpose, adequately resourced and perform properly. There needs to be a line in the sand.”

A spokeswoman for Bank of America said it had since “re-evaluated and improved” its processes. She said the bank told the FCA as soon as it realized that some trades hadn’t been reported as required under the European Markets Infrastructure Regulation. The incident didn’t have a financial impact on clients, she said.

FCA fines for this year have totaled 190.8 million pounds.

— With assistance by Suzi Ring

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