Information on enforcement actions for non-compliant Personal Account Dealing (PAD) and MiFID II transaction reporting - March 2023

For all three questions, we can confirm that over the last 24 months, no enforcement action has been brought against a firm or individual for Personal Account Dealing (PAD).

The FCA has regular communications with both authorised firms and issuers in relation to their employees trading and the robustness of their personal account dealing systems and controls. This has frequently resulted in firms improving their systems and controls and taking disciplinary action against employees where policies are breached.

For question 1, we can confirm there are no open enforcement investigations on the subject of MiFID II transaction reporting.

As you may already be aware, transaction reporting data quality remains a priority for the FCA. The completeness, accuracy and timeliness of the data plays a key role in our ability to conduct effective market oversight. We expect firms to perform regular reconciliations on the quality of the information they submit and notify us when errors or omissions are identified.

In Market Watch 70, we evidenced significant progress from firms demonstrating awareness of these requirements. Following our supervisory efforts, the number of entities making a transaction reporting data extract request has risen from 451 in 2018, to 745 in 2022. 922 firms have submitted a transaction reporting breach notification since 2018 and 98.5% of the transaction reports we received in the last 12 months were submitted by an entity that has made a data extract request.

Despite the progress made, there remain some firms that are not meeting our expectations. This was highlighted in Market Watch 70, as well as in Market Watch 59, 62 and 65. We expect firms to take notice of our supervisory warnings. We also conduct proactive work to identify firms that are not meeting our expectations and take a risk-based approach to following up with these entities. This will be a priority for us this year. 

Where we suspect serious misconduct has occurred, we will open an investigation to find out what happened, in order to determine what action to take, if any, including enforcement action. In 2019, we fined UBS AG £27.6 million and Goldman Sachs International £34.3 million for transaction reporting failures. In 2021, Sigma Broking Limited was fined £531,000 for failing to report 56,000 transactions accurately and for failing to identify 97 suspicious transactions or orders that it should have reported to the FCA. These outcomes will have sent a clear message to firms about the consequences of not having effective systems and controls in place to report transactions in a complete, accurate and timely manner. 

For question 2, as there are no open enforcement investigations open under question 1 above this question falls away.

For question 3, the table below shows the number of firms that submitted at least one transaction reporting breach notification to the FCA between 1 January 2021 and 31 December 2022:

Please note that the above figures include instances where a notification was required following the FCA’s identification of a transaction reporting error or omission.

For question 4, the table below shows the number of skilled person reviews instructed by the FCA in respect of Markets in Financial Instruments Regulation (MiFIR) transaction reporting between 1 January 2021 and 31 December 2022:

Please note the above figures do not include independent external reviews initiated proactively by firms. We routinely observe firms engaging the support of skilled persons voluntarily to identify and remediate transaction reporting errors and omissions.