For many years, firms have been required to retain and report the detail of their transactions, but as regulations have evolved the requirements have become increasingly onerous and complex.
Among the most challenging reporting regimes that UK investment firms may find themselves subject to are:
- MiFIR Transaction Reporting – Investment firms are required to report accurate and complete details of the transactions they execute in financial instruments to the regulator by the close of the following working day. The current Transaction Reporting regime, as introduced under the Markets in Financial Instruments Regulation (MiFIR), built substantially on the previous Markets in Financial Instruments Directive (MiFID) regime by increasing the number and types of instruments in scope, tripling the number of data fields required and increasing the level of complexity.
- MiFIR Trade Reporting – Transactions that are concluded off-venue must be reported to the market by the seller via an Approved Publication Arrangement (APA) within one minute for equity and equity-like instruments or fifteen minutes for non-equity instruments. The details, such as price, quantity and execution date and time, must be made available under the regulation’s post-trade transparency obligations. Recent regulatory changes under MiFIR have brought more instruments and firms into scope.
- EMIR Trade Reporting – Counterparties to over-the-counter (OTC) and exchange-traded derivative contracts must report details of related transactions to a trade repository by the close of the working day following the conclusion of the contract. This requirement has been in place since 2012 under the European Market Infrastructure Regulation (EMIR). Although many firms choose to delegate reporting to their counterparties, they must still ensure that the reports submitted by their delegates are complete, accurate and timely.
Common features of these reporting regimes include:
- Complexity – all feature complex requirements requiring bespoke analysis and implementation to reflect the unique activities of individual firms;
Monitoring requirements – all require regular, meaningful monitoring; and
- False sense of security – all can lead to a growing backlog of errors which can go unnoticed for months or years
ACA is on hand to review your firm’s reporting frameworks to help you deliver complete, accurate and timely reporting which can reduce the cost and reputational risk that arises from regulatory scrutiny and enforcement.