A first of its kind: FCA issues fine for transaction reporting failures under the UK Markets in Financial Instruments Regulation (MiFIR)
What did the firm do wrong and how can you avoid making the same mistakes?
Infinox Capital Limited has been fined £99,200 by the FCA for failing to submit 46,053 transaction reports between 1 October 2022 and 31 March 2023. As a UK MiFID investment firm Infinox is required to submit transaction reports for all reportable transactions it executes in financial instruments.
However, the firm failed to submit transaction reports for single-stock contracts for difference (CFD) trades executed through one of its corporate brokerage accounts. This limited the FCA’s ability to monitor market data and detect market abuse.
Here are some actions your firm can take to stop making the same mistakes:
1. Speak-up early
On 16 March 2023, Infinox identified its failure to submit transaction reports in relation to trades executed through the single corporate account, after it engaged a third party to review its compliance with transaction reporting obligations.
However, the firm did not submit a formal breach notification to the FCA until 6 July 2023 – which was prompted by the FCA independently identifying this discrepancy in transaction data submitted.
This lack of self-reporting was one of the key issues leading to the fine. It will also have raised red flags about the governance and culture within the organisation which allowed this behaviour to be tolerated.
2. Have data accessible
We all know the FCA is a data-led regulator, but this big spotlight focus on data is pointed in all directions. Having automated systems which can generate statistics accurately and quickly is increasingly important as data requests, and the FCA’s expectations of firms, are rising rapidly.
Infinox suspected initially it had failed to submit c6,000 transaction reports, which rose to c50,000. However, it took the firm a year to provide complete and accurate data – completely unacceptable from the FCA’s perspective. The FCA expects firms to submit accurate and timely transaction reports.
3. Controls must be checked
It was the responsibility of a single individual at Infinox to manually identify which financial instruments were reportable when new business commenced, however there were no checks to ensure that the correct trades had been identified.
Controls which aren’t regularly quality checked and / or challenged aren’t robust - and, as we can see in this case, mistakes were made over and over again without being picked up.
Contacting us
We know firms don’t always get it right – but they do need to implement a strong control environment and react quickly when issues do arise.
We can help. If you’d like to chat this through more, please get in touch.
