Case Study: Helping a Leading Hedge Fund Address Transaction Reporting Errors 

Company: Leading hedge fund with an AUM of over £15bn 
Location: Headquartered in London, the firm has offices across Europe, Asia and the U.S.
Financial Services Sector: Hedge Fund

Overview

The Financial Conduct Authority (FCA) repeatedly states that complete, accurate and timely reporting under the Markets in Financial Instruments Regulation (MiFIR) plays a critical role in allowing the regulator to achieve its statutory objective in relation to the protection of the integrity of the UK financial system.  

Errors in reports can not only lead to undetected market abuse but also pose significant financial, reputational and compliance risks for firms reporting incorrectly. Correct reporting is therefore essential to avoiding regulatory scrutiny, enforcement action and complex and costly remediation projects.

The challenge

The hedge fund is regulated by the Financial Conduct Authority, with an AUM of over £15bn investing in a range of securities and instruments. The firm identified a number of MiFIR reporting errors through its regular monitoring, which led to a desire to conduct a comprehensive analysis of its historic reports to identify any additional errors that should be incorporated into the related remediation project, as well as to revisit its reporting and monitoring framework to identify potential enhancements that might help prevent re-occurrence.

The solution

ACA Regulatory Reporting Monitoring & Assurance (ARRMA) is ACA’s dedicated transaction reporting solution. ARRMA findings reveal that 97% of firms using our full review service feature multiple errors in most (and in some cases all) of their reports.

The multi-award winning solution blends technology with specialist consulting oversight to helps firms quickly identify remedial changes that would otherwise require niche (and often expensive) internal resources that can distract firms from other projects. 

“As an existing client of ACA we were already familiar with the breadth of expertise that can be called upon to assist with a variety of regulatory topics. Upon being introduced to the ARRMA team it quickly became clear that they had a nuanced appreciation for the known errors and what could be done to address them, as well as immediate insights into how we might go about identifying any others and making improvements to our framework.” 

ACA's proposal, which set out a suite of different elements from logic specification review and enhancement to comprehensive data analysis and internal procedure development, provided us a tailored menu of support services from which we were able to select and devise a bespoke project to meet our needs.”

The result

The project commenced with a MiFIR training session lead by a senior member of the ARRMA team on transaction reporting obligations, appropriate systems and controls, and best practices for all those involved in the reporting framework. “The training was customised to our specific activities and arrangements and presented the complex requirements and subtleties of the reporting requirements in a way that could be clearly understood.” 

ACA also reviewed the firm’s logic specification on a field-by-field and instrument-by-instrument basis. This helped to identify all of the firm’s reporting scenarios and document how reports should be constructed in each case.  “This provided us with a clear and understandable document that could be provided to IT personnel for coding improvements, as well as to Operations and Compliance as a monitoring resource.” 

In the interests of giving the firm a ‘clean slate’ the ARRMA team were able to conduct a review of all transactions and reports right back to 3 January 2018 in order to flush out any and all errors that might have featured in reports since MiFIR came into effect. “This provided us with considerable assurance that we would be able to identify, resolve, remediate and prevent the reoccurrence of previous reporting problems before proceeding with the new reporting framework.”  

ACA thereafter provided a full range of support that not only focused on the reports themselves and the errors within them, alongside the technical requirements of the rules, but also included discussions with the firm’s internal IT and Operations teams. 

“Errors were presented in a clear and practical way by the ARRMA team alongside supplementary discussions and support around how best to fix them. By working closely with our IT, Operations and Compliance personnel, ACA were able to produce a monitoring framework that was practical, taking into account our existing systems and processes as well as being reflective of our risk appetite.” 

“Throughout the process ACA have also provided prompt, precise and practical responses to ad- hoc questions that have arisen, and the depth of resourcing in the team has meant that ARRMA team members have been able to step in, having been pre-briefed, to assist with queries when the core team has been out of the office.”

ARRMA’s unique blend of human and machine makes it possible for firms to not only quickly identify transaction reporting errors before they are identified by the regulator, but also to remediate them and prevent their reoccurrence in a pragmatic and scalable way. 

“Our confidence in the quality of our reporting has increased significantly as a result. ACA are experts in trade and transaction reporting, delivering a first-class client service and being able to handhold clients through the complexities of the regulations.”

“The ARRMA team are absolutely outstanding. They were able to quickly understand our position, objectives and priorities and guide us through a difficult project. Not only are they experts in a very niche area and have always provided spot on and pragmatic advice, but they also took the lead where we needed their guidance and have been continuously providing support, even on a very short notice. I have never worked with professional advisors who would be so reliable, responsive, proactive and flexible.”

Book a free review

Click here to book a free transaction reporting review to help identify problems in your regulatory reporting before the regulator does. This includes a summary report identifying, among other things, the percentage of reports submitted that include an error and the number and type of errors affecting those reports.   

With ACA Regulatory Reporting Monitoring & Assurance (ARRMA) support, firms benefit from a service offered by no other firm; a unique blend of technology and consulting that identifies transaction reporting errors and provides practical advice and support to resolve them.

How we help

Our transaction reporting specialists are on hand to help your firm identify failings in the completeness, accuracy, and timeliness of your trade and transaction reports.  

In addition to our core ARRMA offering, we have a range of trade and transaction reporting solutions. These range from one-off logic specification reviews and assessments of systems and controls around your reporting framework, to regular, cost-effective analysis of your MiFIR or EMIR reports to identify issues relating to the accuracy, completeness and timeliness of reports.

Our service also includes the provision of a wide range of management information relating to the quality of reporting to assist senior managers with their ongoing oversight in keeping with their responsibilities under the Senior Managers & Certification regime.

Contact us or call +44 (0)20 7042 0500 to learn more about how we can help you address your regulatory reporting requirements.