Data management provider AutoRek has published guidelines on how firms can avoid incurring penalties under the second Markets in Financial Instruments Directive (MiFID II).
Recommendations include the construction of a “control framework” to increase the accuracy of transaction reporting and decrease the risk of being fined by the Financial Conduct Authority (FCA).
AutoRek referred to the recent cases of 14 firms fined by the FCA under original MiFID regulations, including an undisclosed “large investment bank” accused of misreporting over 220 million transaction over a period of almost a decade.
It was also highlighted that the complexity of MiFID II requirements compared to the original regime is expected to see an increase in the penalisation of firms as the FCA tighten their enforcement.
AutoRek predicted the targeting of buy- and sell-side firms, particularly over transaction reporting.
The advice concluded with a statement from the FCA’s director of enforcement and oversight, Mark Stewart, warning that: “Firms must have proper systems and controls to identify what transactions they have carried out, on what markets, at what price, in what quantity and with whom.”
“If firms cannot report their transactions accurately, fundamental risks arise, including the risk that market abuse may be hidden.”
