Deutsche Bank has been fined £4.7m for a coding error that caused the firm to log trades incorrectly.
The Financial Conduct Authority (FCA) issued the fine on Thursday. Its report explained that Deutsche Bank’s systems had been recording buys and sells the wrong way round, meaning the data provided to the FCA was incorrect.
The issue related to Equity Swap CFDs (contracts for difference) offered by Deutsche. An Equity Swap CFD is a financial instrument that allows people to bet on the movement of a share price, without owning any of the shares in question.
Deutsche Bank avoided a larger fine of £6.7m because it agreed to settle at an early stage of the investigation.
The report into the incident by the FCA does not elaborate on the coding issue, but most banks use in-house platforms for financial services, so the issue most likely relates to the actions of an internal IT staffer or outsourced software house.
While the FCA said it did not believe there was any “deliberate or reckless” behaviour by Deutsche, director of enforcement and financial crime, Tracey McDermott, said firms had to ensure the information they gathered and turned over was correct.
”Effective market surveillance is critical to maintain the integrity of our markets and depends on accurate and timely reporting of transactions. Deutsche is a major market participant responsible for reporting millions of transactions every year,” she said.
“We have repeatedly highlighted the importance of accurate transaction reporting and taken enforcement action against a number of firms. There is simply no excuse for Deutsche’s failure to get this right.”
Deutsche acknowledged the fine and said it had improved its processes as a result.
“In March 2013 a software coding issue in our reporting system for certain CFD and swap transactions was identified,” it said. “We immediately undertook a complete review of our transaction reporting systems to rectify the problem and strengthen our control framework.”
Deutsche Bank is the eleventh bank to be fined for transaction reporting transgressions, with its fine the second highest levied, after a £5.6m fine handed down to the Royal Bank of Scotland in July 2013.