Merrill Lynch, a unit of Bank of America, was fined on Monday in the amount of $45.5 billion by the Financial Conduct Authority in Britain for not reporting details of its trading in exchange-traded derivatives, the British market regulator announced.
Monday’s enforcement action, which is the first of a kind under Britain’s European Markets Infrastructure Regulation, was focused upon on more than 68.5 million transactions involving derivatives from February of 2014 through February of 2016.
These transactions represented contracts with values that were agreed upon based on underlying indexes, securities and assets.
Reporting of these transactions are of much importance because the process gives help to authorities as a way to assess and to address the risk inherent in the financial system caused from a lack of overall transparency said the market regulator.
The requirement to report the transactions was one of the key reforms that were introduced following the financial crisis of 2008.
Merrill Lynch did cooperate with the investigation by the Financial Conduct Authority of the issues involved and agreed to the settlement during the early stage of the overall review.
Because of that, the Bank of America division of wealth management was given a discount of 30% on what would have resulted in a fine of almost $65 million.
On Monday, through a prepared statement the Merrill Lynch unit of Bank of America said that as soon as it had discovered that a certain number of trades were not being completely reports to the trade repository, it immediately made a report of such and sent it to the FCA.
The statement also said that Merrill Lynch had re-evaluated as well as improved its related processes and could confirm that none of its clients had been impacted financially because of the lack of reporting.
Despite the cooperation by the company and the correction it made of the lapse in reporting, Merrill Lynch had been the subject previously of two similar and related issues, said the Financial Conduct Authority, in its prepared statement.
The executive director of FCA’s enforcement and market oversight said through a prepared statement that it was vital that the reporting companies ensure that their reporting systems for transactions are tested, adequately resourced as well as perform properly. He added that a line in the sand was needed to keep transparency.