The FCA’s latest Market Watch has outlined recent observations on transaction reporting and instrument reference data regimes. The organisation aims to help firms maintain and improve the quality of their work in these areas.
Transaction reporting provides the FCA with data to prevent crime, examine market events, and support conduct supervision. The authority claims that the progress of MiFID II’s aims to improve the quality of this data have been encouraging, with firms more aware of the importance of transaction reporting.
However, the FCA states that several companies are still not conducting sufficient checks on their data, with the samples they provide not reflecting the reality of their trading.
In accordance with Article 27 of UK MiFIR, trading venues must submit instrument reference data to the FCA for all financial instruments admitted to trading or traded on their venues. Systematic internalisers (SIs) must additionally include data on reportable instruments that have not been admitted to trading or traded on a trading venue.
The FCA’s Market Data Processor gives firms feedback on each reference data file they submit. The organisation states that both trading venues and SIs should have systems in place to identify faulty or incomplete data, and if such data is submitted, the authority must be notified and the information rectified.
Without the correct data, market oversight cannot be achieved, and transaction reports may be falsely rejected, the authority affirms.
