Compliance officers and reporting analysts at British firms are being urged to check their adherence to their firms' obligations to report transactions, helped by a series of insights about 'MiFIR reporting' from the Financial Conduct Authority.

In instances where the creation and/or submission of reports have been outsourced to a third party, it remains the firm’s responsibility to conduct regular checks to verify the accuracy of submissions. Even in instances where third party outsourcers have been employed, firms must be able to show that they have made every attempt to reconcile data.

The most common errors that the FCA sees

Having reviewed the quality of the data that it receives, the regulator has warned companies to be vigilant when looking for errors which are easily overlooked. A prime example is the ‘MiFID Investment Firm’ field. To date, some British firms have been marking that field as ‘FALSE’ when they should not.

Related to this is the capacity for missing or duplicate transaction reports. Duplicates tend to be most common when a trading venue assumes that it is reporting on behalf of a non-MiFID firm, when in reality that firm is subject to the MiFID regime. This can lead to different reports from the two different entities in relation to the same trade, creating headaches for all concerned at a later stage.

Recent communications from the FCA, including its Market Watch newsletter, have clearly shown that some firms in the industry ought to do more to comply with MiFIR. There are some common themes where firms are repeatedly struggling but are fairly straightforward to address.

These include the moment when the clocks change as a result of daylight-saving time, which applies when the UK is one hour ahead of Greenwich Mean Time between March and October, which can have a noticeable effect on the data that relates to trading times. For the sake of clarity, all data should be submitted in GMT.

Other common errors that firms continue to make relate to the use of default trading times (no longer permissible since MiFID II), reporting trades denominated in minor currencies (i.e. pence not pounds), the use of dummy national identifiers and inconsistently populating the Trading Venue Transaction Identification Code.

Firms have also been advised to be careful when using the ‘INTC’ or the client aggregation account. The guidelines specify that this account should be flat at the end of the day and the FCA is finding that this is not the case. The new transaction reporting regime is deliberately linear, the idea being to let the FCA see all market activity and changes in position. Companies ought therefore to refer to the FCA guidelines that tell them when they should report collectively and when they should not.

Now that the reguation has been in operation for two years, the FCA has the means by which to spot firms that are not ensuring that their data is of high quality, as required by the rules. Firms must look hard for problems with their data and then do all they can to rectify them.