A-Team Insight Blogs

MiFID II Transaction Reporting Requirements Posing Big Problem for Investment Firms

Share article

Over 1,000 investment firms identified problems with their MiFID II transaction reporting requirements in 2018, according to regulatory consultancy Bovill – raising questions around how well the industry is really adapting to the complexities of the new regime.

A Freedom of Information request found that a total of 1,335 notifications of inaccurate transaction reporting were submitted to the Financial Conduct Authority (FCA) in the first 12 months of MiFID II (which came into force on January 1, 2018) as firms struggle to get to grips with the new requirements.

The figure represents around a quarter of the 6,000 MiFID II compliant UK businesses, and Bovill Managing Consultant Damon Batten notes that it could in fact represent a significant undercount, as the data only includes businesses which self-identified errors. Under the EU directive, investment firms and trading venues are required to notify the FCA promptly if they identify any errors or omissions within their transaction reports. However, Bovill research warns that “many thousands more firms” are likely submitting inaccurate reports, but are failing to catch them or to inform the regulator.

“Even MiFID II-ready firms are struggling to submit correct reports, while many are still not ready, and some mistakenly believe they’re ready despite almost certainly making reporting errors,” says Batten.

So far, the FCA has not yet enforced the regulation with any degree of aggression, and has indicated that it is prepared to give firms time to settle in and adapt to the new regulation. However, its approach has raised ire within the industry, with prominent figures such as SCM Direct Co-Founders Alan and Gina Miller citing “a complete breakdown in the FCA regulatory enforcement action,” and threatening legal action against the regulator for failing to penalise investment managers that are breaking the rules.

Yet there are signs that the FCA’s patience is running out. On March 27, the regulator fined Goldman Sachs over £34 million for failing to properly report more than 220 million transactions. The previous week, UBS was fined £227.6 million over 135.8 erroneous transaction reports made between November 2007 and May 2017.

“With the FCA handing big fines for reporting failings to companies like UBS and Goldman Sachs, it’s time firms paid closer attention,” warns Batten. “The FCA’s goodwill will be thin for firms still unable to catch breaches by MiFID II’s second birthday.”

One Reply to “MiFID II Transaction Reporting Requirements Posing Big Problem for Investment Firms”

Leave a Reply to Rich Robinson Cancel reply

Your email address will not be published. Required fields are marked *

*

Related content

WEBINAR

Recorded Webinar: FRTB: The time to get your data in order is now

Fundamental Review of the Trading Book (FRTB) regulation requires firms within its scope to source significant amounts of data, some of which has not previously been required and is difficult to pin down. The data management challenges of the regulation’s Internal Model Approach (IMA) to market risk capital calculations include ongoing P&L attribution, back testing...

BLOG

Bloomberg Acquires RegTek.Solutions Amid Growing Demand for Reporting Integration

Last week Bloomberg announced the acquisition of RegTek.Solutions, a 2017 software spin-out from capital markets consulting firm Risk Focus. The move marks a renewed focus from Bloomberg on the regulatory reporting space, amid growing demand from financial institutions for more strategic, harmonised solutions to help meet today’s increasingly rigorous compliance challenges. Financial institutions are facing...

GUIDE

Regulatory Data Handbook 2019/2020 – Seventh Edition

Welcome to A-Team Group’s best read handbook, the Regulatory Data Handbook, which is now in its seventh edition and continues to grow in terms of the number of regulations covered, the detail of each regulation and the impact that all the rules and regulations will have on data and data management at your institution. This...