04/08/2010
An article in Securities Industry News highlights the need for improved audit trails and record keeping in trading systems.
An article in Securities Industry News reports that
The Financial Services Authority has fined Credit Suisse, Getco and Instinet Europe $6.37 million for failing to provide accurate and timely data on transaction reports that could help detect market abuse.
The United Kingdom’s securities regulator said that Credit Suisse would pay $2.7 million; Getco, a privately-held market maker would pay $2.1 million and Instinet Europe, an agency brokerage owned by Nomura Holdings, would pay $1.6 million.Credit Suisse failed to report about 40 million transactions that it executed between November 2007 and November 2008. Of those, 30 million were equity trades executed on the London Stock Exchange.
Getco did not accurately report data for 46.3 million trades, including nearly 32 million trades executed on the LSE.
The charges against Instinet Europe appeared to be narrower: for late reporting and for errors in 22.1 million transactions between April 2007 and June 2009 which included “netting of many trades into a few reports.”
Under the European Markets in Financial Instruments Directive (MiFID), buy- and sell-side firms must forward transaction reports on bonds, exchange-listed equities and all derivative transactions to regulators in their home market or elsewhere. Reports must be delivered within one day of the execution of trades. The reports are more detailed versions of typical intraday trade reports.
With trades executing at ever higher peak frequencies, legacy systems need fixes to be able to produce real audit trails. One of the business case motivators behind TimeKeeper is a need to distributed reliable and precise time to all the systems involved in processing transactions.