Transaction reporting is a highly complex area that many firms struggle to fully understand and successfully implement, as has been demonstrated by a number of high profile enforcement cases.
Transaction Reporting is a highly complex area that many firms struggle to fully understand and successfully implement, as demonstrated over the years by a number of high profile enforcement cases. Transaction Reports are used by the Regulator in the detection of Market Abuse and therefore it is important that reports made are accurate and complete.
Fines for transaction reporting failures lead to reputational damage and in many cases costly reviews in the form of s166 Skilled Persons reports. We have also seen a proliferation of firms and their senior management being required to sign attestation letters issued by the FCA with regard to confirming the accuracy and completeness of their transaction reports.
EMIR Trade Reporting
As well as MiFID transaction reporting, many firms are also caught under EMIR Trade Reporting. EMIR Trade Reporting was introduced in 2014 as a response to the 2008 financial crisis where it became apparent that greater transparency and risk management was required, particularly in the OTC derivative space.
EMIR requires all EU/EEA financial firms (including investment banks, wealth management firms, private client stock brokers, asset management firms, spread betting firms, inter-dealer brokers and hedge funds with EU Alternative Investment Fund Managers “AIFM”) and non-financial counterparties (corporates) with outstanding derivative contracts to report details of those contracts and all new derivatives transactions they enter into (including modifications) to an authorized Trade Repository. Counterparties can delegate the reporting to the other counterparty or a third party but will retain regulatory responsibility.
MiFID Trade Reporting
The purpose of MiFID trade reporting is to promote market transparency and to help provide fair price discovery and liquidity through the timely provision of information to the market. Post trade transparency requirements in transactions currently apply to shares and assists in the maintenance of a fair and orderly market. The scope and deferred publication regime will change under MiFID II/MiFIR.
How Duff & Phelps Can Help
Whether you are facing regulatory action or simply require some independent and expert assurance that your current transaction reporting and/or trade reporting arrangements meet the required standards and forthcoming changes, Duff & Phelps can offer a highly skilled review and assurance service to minimize your potential regulatory risk. Our transaction reporting specialists have over 20 years’ experience of working at the FCA’s Transaction Monitoring Unit (TMU), combined with extensive experience of working within financial firms and providing consulting services to investment banks, brokers, platform providers, asset managers, exchanges and multilateral trading facilities (MTFs).
Whether you are a smaller firm looking for a subject matter expert or an investment bank looking for assistance with reporting your complex derivatives, our specialist staff can help you. We tailor our practices to the trading activities and processes of our clients.
Our Services Include
- One off or annual assurance review
- Assisting firms and senior management to gain assurance to sign a transaction reporting attestation letter with confidence to the regulator
- Deep-dive reviews and regulatory investigations
- Preparing for visits from regulators to review transaction reporting
- Regulatory reform implementation and guidance including MiFID II/MiFIR
- Managing or assisting with transaction reporting quality reform programs
- Capturing and documenting the reporting requirements specific to your trading scenarios and product mapping across all systems
- Apportionment of responsibility and accountability
- Reviewing and guidance on effective oversight and control mechanisms
- Documentation (policies, operational procedures and reporting logic)
- Developing front to back quantitative and qualitative reconciliations of your transaction reports to the regulator
- Creation of a tailored test pack (transaction reporting control matrix)
- Independent data accuracy testing of all instruments, scenarios and data fields
- Effective change management controls
- Preparing and delivering technical, regulatory and operational staff training across departments
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