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FCA Market Watch 74

2023-07-31 01:07:38

In this edition of Market Watch, the FCA describes some common transaction reporting issues they recently observed under RTS 22 transaction reporting and the submission of financial instrument reference data under RTS 23.

Here at Point Nine we have been performing transaction reporting under RTS 22 for many years so we are familiar with the issues raised by the FCA. Below we look at some of the observations made by the FCA and explain how the Point Nine service can assist clients address and prevent these issues in their daily transaction reporting.

FCA Market Watch 74 Analysis
FCA observations Point Nine Solution
Reconciliations and breach notifications
Firms are required to reconcile front-office records with data samples provided by the FCA under Article 15(3) of RTS 22. Here the FCA reminds firms to perform regular reconciliations of their Front office records vs their transaction reporting data extracted from the FCA’s MDP portal.
In addition to that the FCA also reminds of the breach notifications which they are required to send in case of any errors or omissions in their transaction reporting.
From the tables provided, we understand the FCA monitors both the firms that are accessing the MDP portal in order to reconcile their transaction reporting data and also the number of firms that have submitted a breach notification.
The Point Nine Solution offers clients a comprehensive reporting toolset that includes an automated email notification system and a client portal that delivers real-time transparency into the reporting status. With this level of transparency, clients can quickly identify any errors in their reporting and determine whether it is necessary to send a breach notification to FCA
Additionally our clients can make use of the P9 Recon tool, to reconcile their internal front office records vs the sample transaction reporting data held by the FCA via the MDP portal. The P9 Recon tool is an agile, fast, efficient and scalable solution, which can handle endless data from multiple sources and which can also be performed in real-time. We offer our client an end to end solution covering all the regulators requirements.
Identification of Investment and Execution Decision Makers
Where more than one person or algorithm is involved in an investment or execution decision, the person or algorithm taking primary responsibility for the decision should be identified in the transaction report. Article 8(2) and Article 9(4) of RTS 22 require firms to establish pre-determined criteria for determining who is primarily responsible for making investment and execution decisions.
A thorough analysis of our clients data is conducted and the reporting specifications regarding these fields are communicated during the onboarding process in order to avoid the misreporting of these fields.
Transmission Agreements
Under Article 26(4) of UK MiFIR and Article 4(1)(c) of RTS 22, where certain predefined conditions are met, including an agreement between the ‘transmitting firm’ and the ‘receiving firm’, the transmitting firm is relieved of the requirement to submit a transaction report. This is because the report submitted by the receiving firm contains all necessary information on the transaction. This information includes the client of the transmitting firm being identified as the buyer or seller, the receiving firm identified as the executing entity, and the transmitting firm identified in the transmitting identification code for the buyer or seller fields.
Our clients trading flow is also analysed during the onboarding stage in order to understand if transmission under Article 4 has taken place, all the relevant entities involved, in order to determine how the transaction report should be populated, and which entity should be reporting.
Looking through the chain
We do not expect firms to look through a chain of intermediaries in scenarios other than the transmission of orders meeting the conditions of Article 4 of RTS 22
As mentioned above our clients trading flow is analysed in order to identify all the relevant entities involved and to ensure these are reported accurately in their transaction report
Complex trades
The FCA clarifies that it expects firms to report a single price in each leg of trade where they are reporting complex trades.
Our validation engines includes multiple rules for the price field, which includes validations at multiples stages of our data quality/ exception management process. This includes validation rules at the initial data import stage, post enrichment of data, and also at the pre submission to the ARM stage.

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