• Fined Merrill Lynch International £34,524,000 for breach of Principle 3, Art 9 EMIR.
• MLI agreed to settle at an early stage and qualified for the 30% Stage 1 discount.
• Without the discount, FCA would have imposed a financial penalty of £49,320,000.
• MLI breached Art 9 EMIR by failing to report 68.5mn exchange traded derivatives.
• Also failed in adequate oversight, failed to test its reports, lacked human resources.
• FCA considered breach particularly serious as MLI breached reporting rules before.

Background

• MLI's trading data system did not record market leg of ETD transactions separately.
• It therefore had to be artificially generated by EMIR reporting system used by MLI.
• System required additional coding and embedded data to identify ETD transactions.
• On implementation in February 2014, error with static data table failed to work properly.
• Error meant that non-EU third party brokers were not be identified on market side.
• As result reports not made to trade repository on market side leg until February 2016.