RegTech Intelligence

UK FCA MiFID trade reporting policy statement; no enforcement pending on transaction reporting

By Rachel Wolcott, Regulatory Intelligence has contributed to this article.

The UK Financial Conduct Authority (FCA) will this month publish its Markets in Financial Instruments Directive (MiFID II) trade reporting policy statement for equity trade data. The policy statement will also cover a new designated reporter regime for post-trade transparency, an FCA official told the JWG Trading Compliance RegTech Seminar.

Separately, the FCA confirmed in a freedom of information request (FOI 9980) that it has opened no enforcement investigations on the subject of MiFID II transaction reporting.

MiFID II requires trading venues and investment firms to publish information about the price, volume and time of all transactions executed on their systems for equity instruments in as near-real-time as possible. Investment firms and systematic internalisers are required to used approved publication arrangements (APA) for these reports.

The new policy statement will look at improving the trade data by simplifying trade flags and other reporting fields. The FCA will publish a consultation paper later this year on transparency for bonds and derivatives. That paper will also cover the vexed subject of publication deferrals, but the scope of the regime will again include looking to see which sets of fields and flags can be compiled more consistently, the official said.

The FCA is considering issuing more guidance on trade reporting to support these efforts, the official said.

Designated reporter

The April policy statement will also cover the new designated reporter regime. The FCA unveiled this plan in last year’s consultation on improving equity secondary markets (CP22/12). MiFID II allowed firms to agree who would report an over-the-counter trade. Where one party to a trade is a systematic internaliser (SI), the reporting obligation falls on the SI firm regardless of whether it was acting as a buyer or a seller.

The new regime will permit firms to elect themselves as designated trade reporters by notifying the FCA. Firms will be able to register as designated reporters regardless of whether they are an SI in any instrument. Registration will be at entity level. The regime will apply across all classes of financial instruments, equities and non-equities. Designated reporters will be responsible for reporting only trades to which they are a counterparty. Where both or neither of the counterparties are designated reporters, the seller will report, CP22/12 said.

The FCA will publish a consultation on the UK’s consolidated tape proposals in July. Initially the focus will be on a framework for bonds, the FCA official said.

Transaction reporting

The FCA has opened no enforcement actions on the subject of MiFID II transaction reporting since the regime was introduced in 2018, it confirmed in the FOI response. That contrasts with its enforcement activity with regards to MiFID I transaction reporting, where it issued 14 fines in a 10-year period (2009-2019) worth £95 million.

The FCA’s general view is that data quality for transaction reports is good, reflecting investment made by the industry and its engagement with firms.

“Transaction reporting data quality remains a priority for the FCA. The completeness, accuracy and timeliness of the data plays a key role in our ability to conduct effective market oversight. We expect firms to perform regular reconciliations on the quality of the information they submit and notify us when errors or omissions are identified,” the FCA said.

In Market Watch 70, it evidenced “significant progress” from firms. Following its supervisory efforts, the number of entities making a transaction reporting data extract request has risen from 451 in 2018, to 745 in 2022. Some 922 firms have submitted a transaction reporting breach notification since 2018 and 98.5% of the transaction reports received in the last 12 months were submitted by an entity that has made a data extract request, the FCA said.

Some 540 firms submitted at least one transaction reporting breach notification to the FCA between January 2021 and December 31, 2022, the regulator said. That included 93 wholesale banks, 118 asset managers, 93 wealth managers, 54 wholesale brokers and 182 firms categorised as other.

The FCA instructed one s166 skilled persons review for MiFID transaction reporting in 2021 and none in 2022.

“Data quality continues to be a significant focus for the FCA, and we will take action if firms fail to meet our expectations,” the FCA said.

This article was produced by Thomson Reuters Accelus Regulatory Intelligence on 5 April 2023

Join us 29 June 2023

At our next RegTech seminar on the 29th of June, leading SMEs will articulate the key regulatory and market reporting compliance challenges precipitated by divergent global policies.

We will be discussing how proven RegTech can be deployed now to help empower public and private sector alignment of interests.

Register for 29 June 2023 virtual pass 

Please contact if you have any questions or would like to work with us.

To promote global dialogue on how to deliver regulatory change JWG post hundreds of focused articles a year to thousands of subscribers. Get involved and join the mail list.

By hitting the subscribe button you agree to our Privacy Policy