Morgan Stanley fined $5m for LEI and swaps reporting failures
08 October 2020 Washington
Image: JHVEPhoto / Adobestock.com
The Commodity Futures Trading Commission (CFTC) has settled charges against Morgan Stanley Capital Services, a provisionally-registered swap dealer, for failing to comply with swap data reporting obligations.
The charges were brought after it was found that Morgan Stanley had inaccurately reported transaction data for approximately 3 million swaps since 31 December 2012.
The charges, settled last week, required Morgan Stanley to pay a $5 million civil monetary penalty and to retain a qualified outside consultant to verify its remediation of the root causes of the 29 swap data violations set forth in the order.
The errors included failures to report accurate primary economic terms data fields, including legal entity identifier (LEI), unique swap identifier, notional amount, execution venue LEI, and price notation.
In addition, Morgan Stanley reported nearly half of its swaps for one asset class outside of the time parameters required by CFTC Regulation Part 43.
In its order, CFTC recognises Morgan Stanley鈥檚 cooperation with the Division of Enforcement鈥檚 investigation in the form of a reduced civil monetary penalty.
Darragh Hayes, director of LEI Worldwide, tells SLT: 鈥淯pon further investigation, we realised that Morgan Stanley Capital Services had a lapsed LEI between 2013 and 2018. It is quite simple to renew the LEI, and it is possible they did not realise it had lapsed.鈥�
LEIs require annual renewal. When an LEI has been renewed within the last year the status shows as 鈥榓ctive鈥� if it has not been renewed it will show as 鈥榣apsed鈥�.
鈥淗aving a lapsed LEI can have profound consequences,鈥� explains Hayes. 鈥淚t means the data may be out of date, and therefore cannot be relied upon by regulators.鈥�
Morgan Stanley was unable to immediately offer further comment on the LEI lapse or shed light on who the qualified outside consultant would be.
The charges were brought after it was found that Morgan Stanley had inaccurately reported transaction data for approximately 3 million swaps since 31 December 2012.
The charges, settled last week, required Morgan Stanley to pay a $5 million civil monetary penalty and to retain a qualified outside consultant to verify its remediation of the root causes of the 29 swap data violations set forth in the order.
The errors included failures to report accurate primary economic terms data fields, including legal entity identifier (LEI), unique swap identifier, notional amount, execution venue LEI, and price notation.
In addition, Morgan Stanley reported nearly half of its swaps for one asset class outside of the time parameters required by CFTC Regulation Part 43.
In its order, CFTC recognises Morgan Stanley鈥檚 cooperation with the Division of Enforcement鈥檚 investigation in the form of a reduced civil monetary penalty.
Darragh Hayes, director of LEI Worldwide, tells SLT: 鈥淯pon further investigation, we realised that Morgan Stanley Capital Services had a lapsed LEI between 2013 and 2018. It is quite simple to renew the LEI, and it is possible they did not realise it had lapsed.鈥�
LEIs require annual renewal. When an LEI has been renewed within the last year the status shows as 鈥榓ctive鈥� if it has not been renewed it will show as 鈥榣apsed鈥�.
鈥淗aving a lapsed LEI can have profound consequences,鈥� explains Hayes. 鈥淚t means the data may be out of date, and therefore cannot be relied upon by regulators.鈥�
Morgan Stanley was unable to immediately offer further comment on the LEI lapse or shed light on who the qualified outside consultant would be.
← Previous derivatives article
Eurex Clearing expands incentives to switch OTC swap portfolios into the EU
Eurex Clearing expands incentives to switch OTC swap portfolios into the EU
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 网爆吃瓜 Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to 网爆吃瓜 Finance Times
