Thousand of firms at risk of misreporting under MiFID II

Friday 12 April 2019 Blog

As we have been reporting in recent weeks, the number of fines for non-compliance under the previous MiFID I regime has reached record levels and hit some of the biggest investment firms in the UK. In doing so, the Financial Conduct Authority (FCA) has signalled that they will be tightening the screws on those firms are non compliant. One of the key learnings from the 14 fines levied against investment firms is that they did not have adequate controls in place to detect errors either pre or post reporting. MiFID II sought to deliver strict guidelines to prevent a repeat of the past.

It is therefore troubling to read the latest research from the regulatory consultancy Bovill, which shows that more than a thousand investment firms are said to be in breach of the transaction reporting requirements and many more are at risk of inadvertently doing so. The study has found that many firms are falling short of the reporting requirements, while others are struggling to complete their reports and very few have the necessary controls processes in place to detect inaccurate reporting.

Industry experts are agreed that the recent headline grabbing penalties under the previous regulation is likely to be a precursor of the type of enforcement actions we are likely to see under MiFID II. The FCA wants to see that firms have taken the regulation seriously and have adopted procedures that quickly identify issues, have workflows in place to remediate errors and deliver continuous improvement throughout the transaction reporting process.

 

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