The Financial Services Authority is fining Barclays Capital Securities and Barclays Bank £2.45 million for failing to provide accurate transaction reports, and for serious weaknesses in systems and controls in relation to its transactional reporting on its wholesale operations.

The FSA discovered discrepancies in Barclays' data while reviewing a suspected incident of market abuse by an unconnected third party. A subsequent review of Barclays' transaction reporting arrangements in its wholesale banking operations revealed that it did not have adequate systems and controls in place to meet the transaction reporting requirements. These require trading data for reportable transactions to be submitted by close of business the day after a trade is executed. The financial watchdog then uses this data to detect and investigate suspected insider trading or market manipulation.

A substantial number of errors were also found in the data that was being submitted by Barclays to the FSA. The bank's breaches occurred despite repeated reminders to firms of their obligations to provide accurate data and the importance of compliance, which the FSA sent out during the course of 2007 and 2008. The bank co-operated fully with the watchdog in the course of its investigation and agreed to settle at an early stage, thereby qualifying for a 30 per cent discount; otherwise the fine would have been £3.5 million.

Barclays says it has taken a number of steps to address the concerns raised including commissioning a review of its transaction reporting process and committing extensive IT and human resources to improve its processes and resolve the errors.

The fine follows on from an earlier case where HSBC were fined £3 million by the FSA of losing customer's personal data, signalling a stronger attitude from the UK financial regulator in the wake of the banking crisis last year.

Commenting on the case: Alexander Justham, FSA director of markets, 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."

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