FINRA fines BNP Paribas Securities for reporting deficiencies
BNP Paribas Securities Corp has agreed to pay a fine of $375,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From July 2017 through May 2019, the firm over-reported 127,561 Treasury transactions to TRACE. These reports constituted about 14% of the total Treasury reports the firm submitted during the same period.
The over-reporting occurred because the firm incorrectly relied upon a data field that did not contain full and complete BNP Paribas affiliated entity information. As a result, certain internal trades within the firm and transfers between affiliates’ portfolios where no change in beneficial ownership occurred were erroneously reported to TRACE.
From February 2018 through November 2020, BNP incorrectly appended the “.S” modifier to its TRACE reports for 782,320 Treasury transactions. These reports constituted about 40% of the total Treasury reports the firm submitted during this time. The inaccurate reporting resulted because the firm’s reporting logic did not interpret the data correctly. As a result, the firm reported certain Treasury transactions with the “.S” modifier when it should not have.
From July 2017 through November 2020, the firm failed to establish and maintain a supervisory system reasonably designed to achieve compliance with FINRA Rule 6730. During this period, the firm had no procedures designed to achieve compliance with TRACE reporting requirements concerning the over-reporting of transactions with affiliates or the accurate use of the “.S” modifier.
None of the reviews or exception reports used by the firm addressed either over-reporting of transactions to affiliates or the accurate use of the “.S” modifier. Accordingly, the firm’s supervisory system was not reasonably designed to achieve compliance with its transaction reporting obligations for TRACE-Eligible Treasury transactions.
On top of the fine, BNP Paribas Securities has agreed to a censure.