MiFID II introduced significant changes to transaction reporting with firms required to map data across many more fields and incorporate financial instruments newly brought into scope. There were a host of teething problems but three years on, firms should now have confidence that their transaction reporting processes are compliant. Indeed, MiFID II mandates that firms have a means of verifying that their processes are appropriate.
Transaction reports must be complete and accurate – RTS 22
Under MiFID II firms should have “arrangements in place to ensure that their transaction reports are complete and accurate” and include “testing of their reporting process and regular reconciliation of their front-office trading records against data samples provided to them by their competent authorities” (RTS 22)
If you’re in scope you should be checking that the output you send to your ARM is accurately reflected in the reports received by the FCA. You should also check that your reports accurately reflect the transactions executed. And it also makes sense to ensure that you are reporting all transactions required (and no more).
It’s harder to look at the future but you can make sure your systems are designed with compliance in mind. So as well as crunching data you should review your processes. Do you have controls designed to pick up errors in the reports before they are submitted? Do you have controls to prevent over or under reporting? Is your governance such that any issues would be promptly escalated and addressed?
What can Bovill do to help?
Combining Bovill’s regulatory expertise with an technology from Qomply, we offer a health check that provides you with assurance on your entire transaction reporting process under MiFID II.
The health check is a comprehensive assessment of your transaction reporting, covering:
- a review of your end-to-end process, including any high-risk steps specific to your organisation and your documented policy and procedures
- an assessment of your governance and oversight arrangements for transaction reporting
- comprehensive analysis of your order management system data output against both the regulatory requirements and data received by the FCA. Using an intelligent solution overlaid with Bovill regulatory expertise and experience we will assess a sample of your data to check for:
Quality – are your reports correctly populated, formatted and structured?
Completeness – are you sending the correct reports, are you under or over reporting, or sending duplicates?
Accuracy – does the FCA receive an accurate view, matching your books and records?
The service will be managed by our experienced Bovill consultants who will provide you with:
- a summary of the results of each of the steps outlined above, including a detailed breakdown of any errors and omissions in individual reports
- a report of our overall findings, outlining our recommendations for improvement.
Ongoing managed service
Once the comprehensive health check is complete, we will have a thorough understanding of your transaction reporting process and a clear map of your order management system data to the software solutions. We can therefore repeat the quality, completeness and accuracy checks on your data without the need to revisit the other elements of the health check, providing you with a cost-efficient way to get regular, independent assurance on your transaction reports.
As part of the ongoing managed service you will receive:
- a dedicated relationship manager
- periodic check of the quality, completeness and accuracy of a sample of your transaction reports
- a summary of the results of each periodic check, including a detailed breakdown of any errors and omissions in individual reports.
The ongoing service can be provided at intervals that suit your business, be that monthly, quarterly or six-monthly.
For advice on the transaction reporting regime or to find out about our healthchecks, drop us a line.