FINRA fines UBS Financial Services for reporting deficiencies
UBS Financial Services Inc has agreed to pay a fine as a part of a settlement with the Financial Industry Regulatory Authority (FINRA). The settlement concerns alleged violations by the firm of FINRA rules regarding reporting.
During the period from July 2018, through September 2021, UBS failed to timely report approximately 3,850 transactions in TRACE-Eligible Corporate Debt Securities, Agency Debt Securities, and Securitized Products to TRACE, in violation of FINRA Rules 6730(a) and 2010.
Late trade reporting to TRACE impedes real-time, public dissemination of transaction and pricing data. Untimely reporting of disseminated trades directly affects investors and other market participants by depriving them of information necessary to make trading and valuation decisions. Late reporting of large block transactions, which are transactions with an entered volume of $5,000,000 face value or more for a single trade report, has the potential to cause greater impact to market pricing and activity than individual transactions o f smaller volume.
During the relevant period, the firm failed to report timely to TRACE approximately 340 large block transactions in Corporate Debt Securities and 424 large block transactions in Agency Debt Securities. These untimely reports constituted an average of 4.72% of its large block Corporate Debt transactions and an average of 9.3% of its large block Agency Debt transactions.
During the relevant period, the firm also failed to report timely approximately 1,680 transactions (including the 424 large block transactions that were reported late) in Agency Debt Securities and approximately 1,830 transactions in Securitized Products. These untimely reports constituted an average of 3% of the firm’s Agency Debt transactions and 2.25% of its Securitized Products transactions.
During the same period, the firm’s supervisory system was not reasonably designed to achieve compliance with the firm’s transaction reporting obligations for TRACE-Eligible Securities, in violation of FINRA Rules 31 lO(a) and 2010.
On top of the $350,000 fine, the firm has agreed to a censure and an undertaking to revise its supervisory system.