Deutsche Bank fined £4.7 million over coding errors

Software bugs led to financial institution logging trades incorrectly

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Extensive reporting errors made by Deutsche Bank have led to the Financial Conduct Authority (FCA) levying a 4.7 million fine on the firm.

The FCA said that nearly 30 million Equity Swap CFD (contracts for difference) transactions were incorrectly reported by the bank. The errors were caused by coding issues, which reversed the buy/sell indicator for all equity swap CFD transactions.

These Equity Swap CFDs are effectively bets on the movement on share prices but do not entail owning any shares. The FCA did not elaborate on the nature of the coding problems but added that it had already given the firm a private warning in relation to other similar transaction reporting failures. 

The FCA said its overall objective is to ensure that markets work well, with integrity and that "accurate and complete transaction reporting by firms is an essential tool in delivering this objective."

Tracey McDermott, the FCA's director of enforcement and financial crime, said Deutsche is a major market participant responsible for reporting millions of transactions every year.

"We have repeatedly highlighted the importance of accurate transaction reporting and taken enforcement action against a number of firms. There is simply no excuse for Deutsche's failure to get this right. Other firms should be in no doubt about our continued focus on this issue," she said.

In a statement, Deutsche Bank blamed a coding issue and said it has taken action.

"In March 2013 a software coding issue in our reporting system for certain CFD and swap transactions was identified. We immediately undertook a complete review of our transaction reporting systems to rectify the problem and strengthen our control framework," the firm said.

The fine could have been higher but was reduced by 30 per cent as the bank agreed to settle at an early stage. However, the FCA said the size of the penalty reflected the number of incorrect transactions.

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