Barclays fined pounds 2.45m for abuse of new rules.

Byline: Iain Laing

BARCLAYS has been fined pounds 2.45m by the City watchdog for serious weaknesses in transaction reporting at its investment banking arm.

The fine announced yesterday marks the eighth largest ever imposed by the Financial Services Authority (FSA).

The FSA said systems and controls failures came to light while it was investigating suspected market abuse by a third party.

Barclays escaped an even bigger fine of pounds 3.5m after the FSA offered a 30% discount following co-operation from the banking giant.

The FSA uncovered failures by Barclays to provide accurate transaction details as required by the close of business each day - information used by the regulator to detect and investigate suspected market abuse.

Barclays did not have the adequate systems and controls in place to meet stringent new reporting rules, while the FSA also discovered errors in the data submitted.

The breaches took place throughout 2007 and 2008, "despite repeated reminders to firms of their obligations to provis de accurate data", according to the FSA.

Alexander Justham, director of markets for the FSA, said: "Complete and accurate transaction reports are an essential component of the FSA's market monitoring work. Barclays' reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse.

"The penalty imposed on Barclays is significantly higher than previous penalties imposed for transaction reporting errors. This reflects the serious nature of Barclays' breaches and is a warning to other firms that the FSA will not tolerate inadequate systems and controls."

The FSA found failures surrounding 57.5 million transactions by Barclays, with errors in nearly 100% of its reportable transactions.

Barclays blamed inaccuracies in its IT systems and has since committed "extensive" investment to improve and resolve transaction reporting operations.

A spokesman for the bank said: "We have worked constructively and in full co-operation with the FSA throughout the investigation.

"The regulatory reporting errors were caused by inaccuracies in our data feeds to the FSA. No counterparties, clients, or financial reports were affected in any way."

CAPTION(S):

TROUBLE Barclays has failed to meet stringent new reporting rules.