What is it?
As part of MiFIR, Investment Firms should have arrangements in place to regularly reconcile their front office trades against data samples provided to them by their National Competent Authority (NCA).
If their NCA does not have samples to provide, the Investment Firm should look to reconcile against files that their ARMs or Trading Venues have submitted on their behalf.
Why is it important?
MiFIR requires Investment Firms to ensure their transaction reports are complete and accurate, and to have arrangements and controls in place to be monitoring reports received by the NCA or sent by the ARM to the regulator. Without accurate and complete transaction reports, the local NCAs are unable to monitor market abuse effectively.
What do I need to do?
If you are a MiFID Investment Firm, you should check with your local NCA about how you can get access to the transaction reports they hold for you. A firm should be able to request a sample where their LEI is identified as the ‘Executing Entity’ on the MiFIR Transaction Reports. If a portal is not available (for example in Cyprus through CySEC), you will need to obtain the ARM reports for reconciliation purposes.
In the UK, the FCA provides access to a Market Data Portal (MDP) where you can download files, up to one file a day, directly from the portal.
Once downloaded, the daily XML file can be used to compare against your internal trade systems to ensure all transactions that are in scope of the reporting requirements have been reported and reported correctly.
The FCA have recently released a recent Market Watch where they stress the importance of meeting these transaction reporting obligations and that not enough data extract requests have been made and reports downloaded, suggesting that firms are not conducting sufficient reconciliations and therefore, do not have adequate systems and controls in place.
What can TRAction do to help?
As a service provider, TRAction is not allowed to directly access the MDP Portal or any other NCA portal on an Investment Firm’s behalf. TRAction urges its clients to set up their own access and perform regular reconciliations of their in-house data against what is held with the NCA, as well as a reconciliation from in-house data against the ARM Confirmation files TRAction provides on a daily basis.
If there are any discrepancies or logic you are unsure of, TRAction is happy to help assist in investigating and providing explanations.
Please contact us if any support is required.
Emma works in our Sydney office. She works on implementing changes to regulations, improving and expanding regulatory reporting offered by TRAction and helping with new business initiatives. She has 4 years’ experience in transaction reporting and 7 years’ experience in the finance industry. She worked for one of the largest financial services organisations in the UK and then moved to Australia in November 2018 to join TRAction.