TRAction recently participated in the Trade and Transaction reporting 2019 conference in London. Of note was the presentation by Ana Fernandes, manager of the Financial Conduct Authority’s (FCA) Markets Reporting Team, responsible for MiFIR reporting oversight.
Ms Fernandes shared some very insightful statistics and highlighted the areas of focus for the FCA’s surveillance and investigations:
- 8.7 billion transactions reported so far;
- Over 6.7 million unique National IDs (natural person identifiers);
- Over 300,000 LEIs;
- 23 Submitting Entities;
- 7982 Executing Firms reported;
- 3000 UK Investments Firms of which only 384 Firms have submitted a total of 1335 ‘Errors and Omissions Notification Form’. The FCA sees this figure as very low and expects more firms to be submitting this form, undertaking back reporting exercises and making regular corrections (these low figures raise questions on Investment Firms’ systems and controls);
- Only 405 entities have requested and downloaded a sample of transaction reports from the FCA MDP Entity Portal since January 2019 (end to end reconciliation is mandatory under Article 15 part 3. of MiFIR);
- The FCA has a team in place to use analytical tools and thematic investigations to identify potential reporting errors and omissions;
- The FCA has already been in touch with more than 130 firms to follow up on their investigations;
- ESMA also does a twice yearly audit of reporting and passes the results on to the FCA (and other NCAs).
Ms Fernandes also joked that it seems like a lot of 119-year-old people are trading. This was obviously due to a default DOB of 1900 being commonly used as well as LEIs being used such as ‘NOLEIFORTHISCLIENT99’.
Up until now, the FCA has been relatively quiet in regards to the data it receives from the MiFIR transaction reports, especially compared to other major FX & CFD regulators like CySEC and ASIC (albeit under a different reporting regime) but it looks like this is about to change.
What should I do to ensure my reports are accurate?
- The old adage of garbage in, garbage out is paramount here. We strongly suggest brokers look at their client acquisition process and make sure they have strict controls to ensure they capture, record and pass on, Names, Nationality, Date of Birth and National IDs in an accurate and complete manner;
- Investment Firms should regularly compare and reconcile the transaction reports held at their NCA against their internal back office systems. TRAction suggests checks be made daily with an end to end reconciliation carried out at least once a month;
- Keep informed of regulatory updates and subscribe to the relevant news feed from the local NCA or TRAction’s updates here.
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.