A Bloomberg report said that the fines levied on big Wall Street firm JPMorgan Chase & Co by the Financial Industry Regulatory Authority for improper reporting of trades only cost the company three minutes of its yearly profit. JPMorgan, Morgan Stanley and other big bond dealers were fined for not reporting trades properly to the industry's price-tracking system over 11,000 times.
The news agency said that the fines were disclosed by Finra last month. The fine on JPMorgan was considered to be the biggest imposed by the regulator at $95,000. Finra also cited that it have fined at least three other dealers in the last five months for similar violation types.
Regulators are looking to uphold the integrity of the Trace system, a bond-price reporting system which is the biggest window of into a market that has grown around 78% since 2008, thanks to investors who have been pouring money into debt securities. Bloomberg said holding back trade information could give Wall Street dealers an advantage over other customers in terms of pricing.
Head of market-structure research Kevin McPartland at consulting firm Greenwich Associates said about the importance of proper reporting, "If non-reporting is systemic, then that's concerning because the broader market looks to this data as the golden source. It's the best we've got when people try to understand who is doing what in the bond market."
According to a settlement that was released in April, JPMorgan has racked up the highest number of violations in relation to the Trace system that were disclosed this year. Finra said the bank failed to post trades or have missed posting deadlines in at least 6,300 instances beginning March 2010 through May 2012. The settlement revealed that JPMorgan accepted the fine and did not admit nor deny the facts in the case.
When Bloomberg asked Finra spokesman George Smaragdis about the conduct of the firms, he said instead via email, "Finra reviews the accuracy and timeliness of every single trade, (producing 125 enforcement actions related to Trace trade reporting in the past two years)."
