Majority of Firms in Breach of Transaction Reporting Requirements

Data from a Freedom of Information Act request to the FCA has revealed that firms are either transaction reporting incorrectly or not adhering to the MiFIR requirement to monitor their reporting using submission data made available to them by the FCA. 

The information provided by the FCA and requested by ACA Group (ACA) showed that the number of firms using the Market Data Processor (MDP) system, the key to controlling the quality of data submitted, was low – with just 905 firms registered with the MDP, out of around 3,000 MiFID firms (30%). What’s more, even among firms registered with the MDP, the number of those who are actually obtaining data extras is very low with just 678 in 2020. Meaning that most firms (78%) were in breach of the regulatory requirement under RTS 22 to regularly obtain MDP data for the purposes of reconciliation. 

For firms with access to the MDP and who were actually extracting data, 62% identified (and reported to the FCA) errors in their reports in 2020. Taken in isolation, this represents a high number of firms with errors in their reports, but taking into account ACA’s own analysis, which identified 97% of firms having errors in their MiFIR and EMIR reports, might suggest that there are also still a large number of firms who are obtaining MDP files extracts but failing to identify errors therein. This is either because firms are not subjecting them to sufficiently comprehensive analysis or not analysing them at all.

Charlotte Longman, Director at ACA Group: “For the FCA to monitor for market abuse effectively, it is vital that transaction reporting data is complete and accurate. 

Yet, the data we see today is worrying and seriously calls into question how accurately firms are following regulatory requirements. The majority of firms are not extracting data from the MDP; and of those that are, it’s clear that they are not identifying, and notifying the FCA, of all the errors that exist within their reports.  

Despite a lack of public enforcement action in relation to MiFIR and EMIR reporting so far, regulators have begun to express their growing frustrations that firms aren’t getting it right, and we anticipate a clampdown from them if things do not improve.”

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Notes to editor:

• This release follows on from a previous media alert flagging that 97% of firms are reporting incorrectly under MiFIR/ EMIR.
• ACA findings referenced are based on analysis of firms using ACA’s Regulatory Reporting Monitoring & Assurance (ARRMA) Service
   

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