Partner Ian Hargreaves comments on FCA enforcement in Compliance Week

Partner Ian Hargreaves comments on the news that the FCA has issued its first fine for transaction reporting failures under the Markets in Financial Instruments Regulation (MiFIR), and discusses whether this signals a step-up in enforcement action.

Ian’s comments were published in Compliance Week, 25 February 2025, and can be found here.

“The fine relates to fairly historical incidents, and looking forward you would expect most – especially larger – players in this market to have the systems and controls in place to deal with transaction reporting. The FCA clearly wanted to draw attention to this issue and to use this case as a reminder that it will fine those entities not playing by the rules. On the face of it, the amount of the fine may not seem too significant, which is partly because there was no disgorgement of profits, as the company had not benefited financially from the failures to report, but applying the same methodology the amount could be significantly higher for larger institutions. Accordingly, it is an effective reminder but I would not say it is a significant deterrent.

“The FCA tends to pick on themes and run with them for a period of time – to act as a reminder or even a deterrent – and then move on to another theme or subject matter. It clearly felt it was important to raise this issue at this time. This is not surprising considering changes to both UK and EU MiFIR transaction reporting requirements expected this year with reviews of the rules due to be completed later this year in both the EU and UK.

“There were a few aggravating circumstances in this case which probably meant that the FCA thought it was a useful and easier entity to make an example of at this time. It clearly wanted to make a statement now and it was this particular company which was caught in the headlights. For the purposes of what it wanted to achieve the FCA may have thought it was sensible to pursue this entity, at this time, in relation to the set of facts relating to this incident. Size may not have been its primary concern but it almost certainly helped to get the message out quickly. Size probably does matter in relation to this type of infringement where the systems and controls – especially historically – may not be as sophisticated as those in larger institutions.”