B
Black Swan
FSA/PN/009/2011
20 January 2011
The Financial Services Authority (FSA) has fined City Index Limited (City Index) £490,000 for failing to provide accurate transaction reports to the FSA.
Firms are required to ensure they submit data for reportable transactions by close of business the day after a trade is executed. The FSA uses this data to detect and investigate suspected market abuse including insider trading and market manipulation.
Between November 2007 and September 2009, City Index failed to submit accurate transaction reports in respect of approximately 2 million transactions, representing nearly 60% of its reportable transactions. It failed to report approximately 55,000 transactions and reported approximately 1,970,000 transactions with one or more data fields completed improperly.
City Index was also found to be in breach of FSA Principles as the firm failed to put in place a mechanism for ensuring the accuracy and validity of its transaction reports, and failed to identify fundamental errors in its transaction reporting process upon the implementation of a new trading platform.
These breaches occurred despite the FSA sending repeated reminders to firms of their obligations to provide accurate data and of the importance of compliance with the FSA rules on transaction reporting.
Margaret Cole, managing director of enforcement and financial crime, said:
"City Index failed to report accurately a high proportion of its transactions for almost two years. This failure is a serious breach of our rules because it can have a damaging impact on our ability to detect and investigate suspected market abuse.
"Firms and their management must ensure they submit quality transaction reporting data and we encourage all firms to review the integrity of this data on a regular basis. We will continue to monitor the quality of firm reporting and we are committed to taking action where necessary to ensure firms comply with their reporting obligations."
The firm has taken a number of steps to address the concerns raised including commissioning a formal review of its transaction reporting processes by external consultants and implementing a comprehensive remediation project.
City Index agreed to settle at an early stage. In doing so it qualified for a 30% discount. Without the discount the fine would have been £700,000.
Notes to editors
The Final Notice for City Index Limited can be found on the FSA website.
This is the seventh fine the FSA has issued since August 2009 in relation to firms failing to provide accurate transaction reports. On 8 September 2009 the FSA fined Barclays, on 8 April 2010 the FSA fined Credit Suisse, Getco Europe Limited and Instinet Europe Limited, on 27 April 2010 the FSA fined Commerzbank AG and on 25 August 2010 the FSA fined Société Générale.
Previous warnings on the importance of transaction reporting can be found at: Market Watch issue 19 and Market Watch issue 28.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/009.shtml
20 January 2011
The Financial Services Authority (FSA) has fined City Index Limited (City Index) £490,000 for failing to provide accurate transaction reports to the FSA.
Firms are required to ensure they submit data for reportable transactions by close of business the day after a trade is executed. The FSA uses this data to detect and investigate suspected market abuse including insider trading and market manipulation.
Between November 2007 and September 2009, City Index failed to submit accurate transaction reports in respect of approximately 2 million transactions, representing nearly 60% of its reportable transactions. It failed to report approximately 55,000 transactions and reported approximately 1,970,000 transactions with one or more data fields completed improperly.
City Index was also found to be in breach of FSA Principles as the firm failed to put in place a mechanism for ensuring the accuracy and validity of its transaction reports, and failed to identify fundamental errors in its transaction reporting process upon the implementation of a new trading platform.
These breaches occurred despite the FSA sending repeated reminders to firms of their obligations to provide accurate data and of the importance of compliance with the FSA rules on transaction reporting.
Margaret Cole, managing director of enforcement and financial crime, said:
"City Index failed to report accurately a high proportion of its transactions for almost two years. This failure is a serious breach of our rules because it can have a damaging impact on our ability to detect and investigate suspected market abuse.
"Firms and their management must ensure they submit quality transaction reporting data and we encourage all firms to review the integrity of this data on a regular basis. We will continue to monitor the quality of firm reporting and we are committed to taking action where necessary to ensure firms comply with their reporting obligations."
The firm has taken a number of steps to address the concerns raised including commissioning a formal review of its transaction reporting processes by external consultants and implementing a comprehensive remediation project.
City Index agreed to settle at an early stage. In doing so it qualified for a 30% discount. Without the discount the fine would have been £700,000.
Notes to editors
The Final Notice for City Index Limited can be found on the FSA website.
This is the seventh fine the FSA has issued since August 2009 in relation to firms failing to provide accurate transaction reports. On 8 September 2009 the FSA fined Barclays, on 8 April 2010 the FSA fined Credit Suisse, Getco Europe Limited and Instinet Europe Limited, on 27 April 2010 the FSA fined Commerzbank AG and on 25 August 2010 the FSA fined Société Générale.
Previous warnings on the importance of transaction reporting can be found at: Market Watch issue 19 and Market Watch issue 28.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/009.shtml
