The Kaizen team’s previous visit to The Royal Garden Hotel in Kensington was just a few weeks ago when we picked up the Best Compliance & Regulatory Solution award at the Fund Services Awards. We found ourselves at the hotel again at City & Financial’s one-day conference last week to get a flavour of how ready the industry is for the go-live of MiFID II in the new year. Kaizen’s Ian Rennie is pictured and spoke about how Senior Managers can ensure they’re compliant with MiFID II under the Senior Manager’s Regime.
All eyes on reporting data
The keynote address came from the Financial Conduct Authority’s (FCA) Ana Fernandes and she made one thing very clear: The FCA expects firms to be ready come January 3rd 2018. Excuses about the complexity of the new regime will be no use to anybody, especially given the amount of time firms have had to prepare for it, she said. Ana also made the point that a firm’s reporting requirement does not simply end after successful data submission. Constant monitoring is expected post-reporting and any corrections that need to be made should be done quickly. There is going to be a lot of eyes on this data and firms will be called out on anything that looks suspicious.
LEIs are a key focus for regulator
Ana went on to explain that one third of the fields in MiFID II are related to counterparty information and that this is a key area that the FCA is focusing on. They want to know exactly whose investments will have a negative knock-on effect in the market. Of course with this, the mandate of the LEI is justified in the eyes of the regulator. If firms are still disputing this decision at this stage and have not looked into the deeper complexities of the regulation, they have a lot to be worried about.
Data quality must be good at source
The comments on the importance of LEIs were echoed by the next speaker, Francis Gross, Senior Advisor at the Directorate of General Statistics at the European Central Bank. His main focus was on increased harmonisation and standardisation of data and believes that in order to identify market abuse before it is too late, data quality must be good at the source. He compared financial services data unfavourably to that of retail, saying, “if shops had same data quality as financial services then shop shelves would be bare and there would be queues in the street’. The reality is that there is no time to cleanse it at the regulators’ end given the quantity of data they receive every day.
It’s all about data accuracy
My take home point of the whole conference was that gone are the days where firms only need to worry about under or over reporting of data. 2018 will bring a shift of focus to the accuracy and completeness of data reported. Both EMIR RTS 2.0 and MiFID II bring more rigid definitions of data that needs to be reported and firms need to have controls in place to prove they are reporting correctly and completely, something Kaizen is helping its clients with as they prepare for MiFID II.