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UK FSA Extends AII Deadline for Derivative Transaction Reporting to September

The UK’s Financial Services Authority (FSA) is giving approved reporting mechanisms (ARMs) more time before they have to start providing derivative transaction reports using the Alternative Instrument Identifier (AII). The go live date is now 21 September as opposed to end of the first quarter.

The FSA is also setting up a number of support groups and resources, including hosting a new Transaction Reporting Forum, which will cover AII and general transaction reporting quality issues.

The Committee of European Securities Regulators (CESR) had originally wanted each competent authority (CA) to collect this information and share relevant reports with other CAs by November 2008, one year after MiFID went live. However, this was later pushed back to the first quarter of 2009. Now, the deadline has been pushed back again because industry members have said they need more time to build, test and implement the required system changes in order to meet AII transaction reporting requirements.

The FSA says it’s worried that rushing implementation could adversely impact the quality of these transaction reports. The wider testing window will also allow end to end testing between ARMs and their client firms.

The key milestone dates on the revised timeline for the implementation of AII in the UK includes an “ARM/industry development window”, which is currently underway until May, then a testing window running from June to July and, finally, a go live date of 21 September this year.

The FSA says it appreciates that implementing AII requires considerable investment by ARMs and firms and so has set up a few support groups and tools to oil the wheels at these institutions. There is a new AII Working Group made up of representatives from the industry, ARMs and trade bodies. The FSA will also host transaction reporting technical forums with the ARMs on a fortnightly or monthly basis. It has also published a list of frequently asked questions on its website with regards to the implementation.

Finally, the regulator indicates a Transaction Reporting Forum will provide an update on the progress of AII implementation, as well as general transaction reporting related developments and issues.

The first forum, to be held 3 April in London, will cover plans for implementing the AII code and feedback on some of the work being done by the various groups working on transaction reporting, including the work the FSA is conducting with CESR. The FSA says it will “take a look at the quality of transaction reporting”. The regulator plans to hold this forum three to four times a year, depending on the level of interest.

The key objectives of the FSA’s AII project are to meet MiFID obligations for reporting all AII derivatives transactions in an efficient and secure manner. Additionally, all reference data must be obtained in order to understand, validate and route transaction reports to the relevant CA according to MiFID’s criteria.

With its AII Transaction Reporting Technical Specification finalised, the FSA has said that all ARMs who agreed to submit AII transaction reports to it, have now translated the technical specification into their technical specification and issued it to their member firms.

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