About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Why the Reality of Third-Country Regulatory Reporting is About to Bite!

Subscribe to our newsletter

By Volker Lainer, Vice-President of Product Management at GoldenSource.

Just two months until the end of the transition period, ESMA’s latest report brings home the stark reality of what third-country status means for UK financial institutions from a regulatory reporting perspective.

Regardless of whether or not a trade agreement between the EU and the UK is struck, it will not be business as usual when it comes to regulatory reporting. This report is a wake-up call to UK based investment firms still understandably in a state of flux when it comes to understanding precisely what will need to be reported on to whom, and when. It is no secret that the FCA and ESMA have contrasting outlooks when it comes to regulating financial markets. Therefore, in the event of the two sides failing to reach an agreement on equivalence, financial institutions will have to accept the fact that, at some stage, regulatory reporting requirements will start to diverge.

To date, the FCA has made it clear that it will not enforce reporting standards aggressively in the first few months post the transition, which at least gives the market some breathing space. However, if firms are not yet in a position to continue to report properly in the event of future changes to reporting rules, then they will end up playing catch up. This is due to the fact that over the longer term, the FCA could potentially be more stringent on particular rules over and above what ESMA mandates. If this happens, firms will have to re-evaluate their reporting mechanisms to meet the new requirements – and the more fragmented and dispersed their systems, the more difficult that becomes.

With this in mind, ahead of January, the focus must be on data segregation – which involves finding ways to make data for UK and EU available to send to the FCA and ESMA respectively. As and when the regulatory reporting requirements of the two regulators begin to diverge, banks will need to be in a position to go into their UK datasets and make changes without affecting their European reporting commitments, and vice versa. This means that when the FCA eventually issues new rules and thresholds, or tweak existing ones, financial institutions with branches in multiple jurisdictions can immediately comply with any new requirements.

From a technical integration perspective, for example, UK firms doing business with EU entities will have to take measures to submit their reports via EU proxies – so they must decide who to report to. Everything that falls under MiFIR must be reported to the local regulator, which will vet and validate and pass to ESMA. But this decision, and this reporting responsibility, is no trivial task – and potentially throws up a whole host of future problems.

With the end point of the Brexit process now in clear view for financial institutions, some divisive steps need to be taken around regulatory reporting. Only through centralising all their data can firms ensure they’re not just avoiding both non-compliance and costly over-reporting, but also prepare themselves for any future regulatory changes across other third-countries and to reflect potential divergence created by the FCA.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Unlocking value: Harnessing modern data platforms for data integration, advanced investment analytics, visualisation and reporting

4 September 2025 10:00am ET | 3:00pm London | 4:00pm CET Duration: 50 Minutes Modern data platforms are bringing efficiencies, scalability and powerful new capabilities to institutions and their data pipelines. They are enabling the use of new automation and analytical technologies that are also helping firms to derive more value from their data and...

BLOG

10 Major Financial Regulations Reshaping Capital Markets in 2025 (and How to Stay Ahead of Them)

From sweeping reforms in operational resilience and AI governance to the first-time application of AML obligations to buy-side firms, the scope and depth of regulatory change shows no sign of slowing down in 2025. In this post, we present a selection of the most strategically significant regulations coming into effect or having significant impact on...

EVENT

AI in Capital Markets Summit London

The AI in Capital Markets Summit will explore current and emerging trends in AI, the potential of Generative AI and LLMs and how AI can be applied for efficiencies and business value across a number of use cases, in the front and back office of financial institutions. The agenda will explore the risks and challenges of adopting AI and the foundational technologies and data management capabilities that underpin successful deployment.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...