Top ten takeaways from the BBA’s transaction reporting forum

The head of the FCA’s Transaction Monitoring Unit, Ana Fernandes, gave a clear indication of the FCA’s position on MiFID II reporting at the BBA’s Transaction Reporting Forum this morning. 

Here are our top ten takeaways from the event:

  1.  “The devil is in the detail” – Ana acknowledged the tension between being prescriptive with detailed rules vs providing general principles for firms to adhere to. 
  2. “MiFID II is an enhanced regime,” not a new regime.  The FCA and the industry are leveraging 20 years or more of transaction reporting experience. Our take on that is expectations for good quality data will be higher than for a new reporting regime.
  3. MDP applications need to be submitted as soon as possible.  The FCA isn’t seeing “as much traction as expected”.  If you delay too much, don’t expect the FCA to turn it around and they won’t differentiate between the types of entities onboarding whether it is ARMs, trading venues or directly submitting firms.
  4. The FCA is ready to commence industry testing on 3rd July but not all reference data will be available due to dependencies on FIRDS.  Any test cases firms are planning will therefore need to take this into consideration.
  5. The FCA is still not seeing many queries from firms and they would expect more.
  6. Traded on a Trading Venue (TOTV) didn’t get much attention other than to say that the FCA expects the scope will apply to a small proportion of instruments once the trading obligation for derivatives is in force.  We will be publishing a blog shortly with our views on TOTV.
  7. New Q&As are being finalised by ESMA covering amongst other things:
    • Increases and decreases in notional
    • Reference data
    • Corporate actions
    • ISINs.
  8. The FCA will be conducting business validations as well as technical validations.  The technical validations have been published but she did give some indication that the business validations will cover quality tests including matching between reports across firms and other data such as order book data and trade reports.  The FCA expects firms to do the same as part of their data quality efforts.
  9. Where issues are identified, notifications to the FCA should take place in the same manner as today. 
  10. Leniency – on prompting from the floor regarding leniency in the early days post go-live, Ana stated that the FCA will consider each case on its merits. 

It is clear the importance of effective data quality tools especially reconciliations is paramount in the mind of the regulator.  Ana was clear the FCA expects firms to have reconciliations in place at go-live.  Kaizen will be offering cross-entity reconciliations where there’s agreement between parties to help firms meet this requirement.  Do get in touch if you’d like to discuss this or any of your MiFID II reporting requirements further.