Posted: 26/07/2023 | Read time: 3 minutes
In its latest newsletter, issued on 25 July, the FCA talks about RTS 22 transaction reporting and the submission of financial instrument reference data under RTS 23.
The regulator raises issues that investment firms, credit institutions, trading venues, systematic internalisers (Sis) and approved reporting mechanisms (ARMs) should be aware of.
Here are the key points:
Reconciliations and data requests
While the number of firms accessing the FCA’s Market Data Processor (MDP) has risen since 2018, the regulator has recently contacted firms that haven’t been making data requests from the portal. It found some firms were unaware of the portal, while others were relying on data extracted from ARMs to conduct reconciliations.
Timely and accurate transaction reports are essential as the regulator combats market abuse. It’s important to remember firms are required to reconcile front-office records with data samples provided by the FCA via the MDP portal.
As stated in Article 15(3) of RTS 22, firms must reconcile their own record of transaction reports with those of samples from the competent authority. It’s therefore insufficient to rely on ARM confirmations to ensure transaction reports are accurate.
Breach notifications
The number of breach notifications reported to the FCA has declined since 2019. The FCA reminds in-scope firms that UK MiFIR rules dictate that they must cancel incorrect and submit corrected reports when they identify errors or omissions.
The regulator also draws attention to validation rule 269, which rejects transaction reports submitted more than five years after the trade date. Firms should consider this when planning reporting exercises.
Any errors or omissions notifications should detail when the issue first arose and the number of transaction reports affected – even if this goes back longer than five years. The FCA does not expect firms to cancel transaction reports with trade data five years older than the submission date.
How to meet the FCA’s requirements for transaction reporting
The FCA’s newsletter reaffirms the importance it places on accurately reporting transactions. An essential component of this is carrying out regular reconciliations to ensure a report is accurate.
In requiring firms to use a sample of records from the FCA, the regulator can see which firms are failing to comply. Given the high volume of trades firms execute and the need to check the accuracy of a large number of data points, firms should implement automated reconciliation solutions to meet this requirement.