The Complexities of ISO 20022 XML for Transaction Reporting

XML

Background

ESMA went live with SFTR in accordance with the ISO 20022 XML methodology in July 2020. This is the first time an EU transaction reporting regulation went live with XML being the only format available for submission. This XML structure was created to provide an industry-wide framework to be used by all financial standards initiatives. Coming into effect in 2023, the European Markets Infrastructure Regulation (EMIR) REFIT will be adding ISO 20022 XML as part of the requirement for submissions.

The objective

One of ESMA’s goals of introducing ISO 20022 is to improve reporting quality. Where each trade repository has had its own unique submission format to date, it has caused difficulties in data sharing and matching between repositories.

By unifying the submission format to the ISO 20022 XML schema, this should eliminate the risk of discrepancies between reporting parties and repositories due to inconsistent data and allow generation of cleaner data with less variation of file formats for matching among repositories.

Drawbacks

While data sharing is expected to improve under the ISO 20022 standard, the major drawback is that creating these files in XML format is not easily done. Transforming data into the right format to report via XML offers operational challenges and additional costs. Firms are required to develop in-house capabilities that they have not had before.  Firms will need to build test harnesses, then build the platforms, test systems and processes around it. This will require a full technology build and a solid base before firms are able to complete their transaction reporting.

Whilst it is not recommended to use excel to create trade reports, the ability to create or edit XML manually will be extremely difficult compared to old SCSV reports.

The XML outputs and response files from the trade repository are not easily human readable like CSV files, so the ability to perform a quick visual check is also lost.

Summary

TRAction’s regulatory trade reporting solution is built to cover multiple reporting regimes so that the cost and resource burden for investment firms can be reduced.

TRAction can ingest any client file or data format and convert it to XML for submission to the trade repository. TRAction also provides an easy to read summary of the TR response in its industry leading handback and confirmation files.

Please contact us if you would like to know more about how to simplify your reporting for multiple regimes.

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The Complexities of ISO 20022 XML for Transaction Reporting

ESMA went live with SFTR in accordance with the ISO 20022 XML methodology in July 2020. This is the first time an EU transaction reporting regulation went live with XML being the only format available for submission. This XML structure was created to provide an industry-wide framework to be used by all financial standards initiatives. Coming into effect in 2023, the European Markets Infrastructure Regulation (EMIR) REFIT will be adding ISO 20022

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