ASIC fines Deutsche Bank for 'systemic' reporting failures

The market regulator penalised Deutsche Bank $2 million for misreporting more than 260,000 over-the-counter (OTC) derivative transactions, saying the fine reflected "deficiencies" in the reporting framework and such failures were "systematic."

ASIC said Deutsche Bank failed to take all reasonable steps to accurately report the "direction fields data" for 20,483 outstanding transactions and 244,091 terminated or matured transactions across 208 separate business days.

These transactions related to foreign exchange and commodities OTC transactions in breach of ASIC Derivative Transaction Rules (Reporting) 2024 rules.

Such rules require financial institutions to report derivative transaction and position information to derivative trade repositories.

Accurate reporting is necessary to enhance the capacity of regulators to oversee and monitor systemic risk and help detect and prevent potential market abuse, ASIC said, noting Deutsche Bank's failure is "undermining the accuracy of data used to monitor Australia's financial markets."

"The direction fields are important mandatory data elements under the ASIC rules, indicating whether the reporting entity is acting as the effective buyer or seller of a transaction at a specified price," ASIC said.

ASIC added the direction data reporting failures were "systemic and reflected deficiencies in Deutsche Bank's internal reporting framework."

Deutsche Bank cooperated with ASIC's investigation and has paid the penalty. The bank is also implementing measures to prevent further reporting errors.

Deutsche Bank did not admit to contravening ASIC's rules.

"Compliance with the infringement notice is not an admission of guilt or liability, and by doing so, Deutsche Bank has not taken to have contravened the ASIC rules," ASIC said.

Deutsche Bank declined to further comment on the matter when asked by Financial Standard.

In the past, AMP Life and AMP Capital Investors copped penalties of $275,500 and $250,500 for derivative transaction reporting failures.

ASIC put the breaches down to administrative failings, but said the time taken to identify the reporting failures may indicate inadequacies in AMP Capital and AMP Life's systems.

In 2017, Westpac was fined $127,250 for not reporting 112,556 reportable transactions between 2 October 2013 to 30 April 2015.