Trade and transaction reporting challenges facing buy-side firms

Abstract

The Markets in Financial Instruments Directive (MiFID) came into effect on
1st November, 2007 and was designed to regulate investment services in the
European Economic Area. The main objective of this was to create more
transparency in the European financial system with the aim of improving
investor protection. MiFID has two reporting regimes: trade and transaction
reporting. Both regimes will undergo an overhaul in the new Regulation
(MiFIR) together with the new Directive (MiFID II). Reporting in the new
world will create challenges for most buy-side firms, especially ones that
rely on their brokers to report on their behalf. An increase in instrument
scope as well as trade-related detail means an increase in the amount of data
needed to be reported to the regulator. Buy-side investment firms face
building or subscribing to complex data repositories with large rules engines
to cope with the increase in reporting requirements.