UK MiFIR transaction reporting: Fundamental, crucial, a common good — but typically wrong

Abstract

The FCA repeatedly states that complete and accurate data is crucial to transaction reporting. Errors across multiple reports could not only lead to undetected market abuse, but pose significant financial, reputational and compliance risk for firms. Research and analysis conducted by ACA Group has identified persistent and significant problems in submitted transaction reports, including more than six million transaction reporting errors, and that 97 per cent of reports under MiFIR/EMIR contain inaccuracies. Furthermore, analysis suggests that many investment firms are not performing adequate reviews of the quality of submissions. Findings indicate that firms' processes here remain underdeveloped or are otherwise hindered by a misplaced confidence. Such errors and inaccuracies undermine the FCA's ability to identify market abuse and, thereby, erodes the regulator's ability to meet its statutory objective to protect and enhance the integrity of the UK financial system. It is clear that significant errors are still being made four years after implementation. The FCA has hinted it will be combating persistent reporting failings, so it is becoming a question of ‘when’ and not ‘if’ we start hearing about firms being fined or censured. This paper seeks to highlight some of the root causes for those errors and suggests best practices for firms to adopt to begin to prevent and/or remedy mistakes.