RBS failed to properly report 44.8m financial market transactions between November 2007 and February 2013; and fagain to report 804,000 transactions between November 2007 and February 2012.
Poor reporting of its wholesale market and funding activities makes it difficult for the regulator to identify suspected market abuse like insider trading or market manipulation, said the FCA.
Most of the errors involved using an incorrect reference code which made it impossible for the FCA systems to identify the counterparties to a transaction. Other inaccuracies included using the wrong timestamp, firm reference number or venue; incorrect prices; duplicate reporting; incorrect identifier for ‘over the counter’ (OTC) derivatives; and incorrect description for OTC derivatives.
The poor reporting represented over a third of relevant transactions carried out by RBS in this period.
Many of the problems with RBS’ own systems were compounded by the takeover of ABN Amro Bank N.V. in October 2007, said the regulator.
“The FCA considers that, given the considerable resources available to RBS, it should have been able to overcome these challenges and ensure adequate systems and controls were in place,” said the regulator.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Effective market surveillance depends on accurate and timely reporting of transactions. We have set out clear guidance on transaction reporting, backed up by extensive market monitoring, and we expect firms to get it right.”
She added: “The FCA’s overall objective is to ensure that markets function well. Accurate and complete transaction reporting by firms is an essential tool in delivering this objective.”
These failures are particularly concerning because the FCA already provides extensive guidance to firms on how to submit and check these reports, and has taken action against seven firms, including Barclays and Credit Suisse, for similar reporting errors.
The size of the fine reflects the serious nature of the issue. RBS agreed to settle at an early stage of the investigation, and received a 30% reduction of its fine. Without this discount, the fine would have been £8,029,100.
