Most UK and EU-regulated firms find themselves subject to at least one regulatory reporting regime, depending on their firm type and the nature of their activities. Most commonly they are submitting reports under MiFID (MiFIR), EMIR or SFTR. As these regulations have evolved, the related reporting requirements have become increasingly onerous and complex.
The FCA has so far issued fines in excess of £130 million under the MiFID (with almost £62 million levied on just two firms in 2019 alone) and EMIR regimes for reporting failures. The regulator continues to express concerns about the accuracy and quality of reports, but those concerns have, in many cases, not been heeded.
With 100% of firms analysed by our ACA Regulatory Reporting Monitoring & Assurance Support (ARRMA) service showing errors in their reporting* and many firms still in breach by not incorporating market data processor (MDP) data in their MiFIR transaction reporting monitoring, it’s little wonder that regulatory rhetoric is escalating.
The FCA has repeatedly stressed (including most recently in Market Watch 65) the need for firms to not only “review their transaction reports to verify their completeness and accuracy”, but also that they “should not assume a transaction report was accurate because it was accepted by the FCA.”
With the FCA speaking often of the “fundamental” importance of the quality of reports for market abuse surveillance, the regular, effective monitoring of the completeness, accuracy and timeliness of reports reporting submissions is more important than ever. But effective monitoring needs:
- Niche expertise to be able to challenge existing reporting logic and conduct comprehensive data analysis, which can be difficult and expensive to bring in house;
- To be regular and of sufficient scope, which can sometimes detract from other compliance initiatives and activities; and
- To incorporate oversight and challenges of third-party solutions (including approved reporting mechanism (ARMs), Trade Respositories (TRs), order management system (OMS) providers and delegated reporting agents) to identify any errors which have been hardcoded into the reporting framework.
Our latest whitepaper, Trade and Transaction Reporting, Fast is Fine, but Accuracy is Everything, helps you to better understand how to tackle these regimes, with topics including:
- How reporting regimes impact different firm types;
- The risks of incorrect reporting, and how to manage them; and
- The most common industry challenges and confidence levels in the quality of reporting.
*As at 31 October 2020