On 23 October, FCA issued £35mn fine to Merrill Lynch for EMIR failings.
- 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.
- 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.