How we helped a leading EU trading venue take control of the quality, completeness, and accuracy of its MiFIR transaction reporting.
Our client, a leading EU trading venue, was looking to equip its operations team with a comprehensive set of automated tools to meet its MiFIR reporting obligations. The winning solution should provide daily controls over the quality, completeness, and accuracy of the firm’s data, as mandated by the regulators. Importantly, the solution needed to scale to accommodate the firm’s entire transaction dataset and deliver a complete audit trail of data activity.
For our client, the reporting task was made particularly challenging by several factors, amongst which:
- Direct reporting: Being highly sophisticated, our client had the resources to tackle this challenge in-house. Added to that were heightened concerns around data sensitivity, shared by many high-frequency trading firms. This meant reporting directly to the relevant National Competent Authority (NCA) was the logical path. However, removing the ARM from the equation increases regulatory exposure and removes a validation ‘safety net’.
- Mandated reporting: Our client has a mandatory obligation to report on behalf of hundreds of its trading members. Mostly on the buy-side, these non-MiFID firm members include AIFMs, UCITS, and foreign entities of EU market players not in scope for MiFID II reporting. These firms tend to have limited resources dedicated to reporting making the sourcing of allocation data a tedious task.
- Allocations: Accurately reflecting all elements of the execution chain is particularly complex, the scope for error being increased further by the manual nature of the task and a strict T+1 reporting timeline.
- Brexit: our client’s transaction reporting is impacted on two levels. First, they have had to establish connectivity with an additional NCA on the continent, which has proven challenging due to a lack of harmonisation across NCAs’ implementation of MiFIR. Secondly, volumes are likely to increase significantly because of the obligation to report on behalf of EU entities not registered as UK MiFIR firms post-Brexit and the necessity to report to both the EU NCA and FCA.
With all these challenges in mind, our client decided to make transparency, control and ownership key principles of its transaction reporting framework.
Our full suite of transaction reporting controls, deployed on-premise, giving the client complete transparency over the quality of its trade and transaction reporting.
- VALIDATETRADE – On the morning of T+1, the client produces a copy of the output sent to the NCA. Using our service API, the data extracted is then validated against thousands of regulatory and best practices rules (ERQ) to detect any errors and omissions, including valid-but-wrong data.
- LOADTRADE – Using the Edit/Reload functionality, the client updates missing/incorrect information directly in the UI. A new xml message is generated which can then seamlessly be re-submitted to the NCA. Load.Trade also provides a full audit trail of changes
- REPORTABLETRADE – All transactions are checked against an independent set of reference data for over- and underreporting. This step also allows the client to ensure the completeness of its transaction reporting at block or allocation level.
- RECONCILETRADE – Weekly reconciliations of the firm’s transaction
reports against the data held by the NCAs to ensure total accuracy of reporting.
- Cost Mutualisation: From day one, the client identified transaction reporting as a non-competitive function. We mutualise the cost of building and maintaining these solutions to eliminate market duplication of effort. This allows our clients to focus on core, ROI-generating business.
- Shared Intelligence: The world’s leading banks place their trust in RegTek.Solutions by using our solutions as an integral part of their reporting infrastructure. Any new client joining the RegTek community benefits from the collective experience of our client community.
- Strategic Regulatory Service-Level-Agreement: Regulatory change is inevitable, and firms must future-proof their reporting systems. By licensing our products, the client benefits from our commitment to stay up-to-date with and ahead of any regulatory and market infrastructure change.
We call it sustainable compliance.
By using RegTek Solutions, the client can now demonstrate a highly proactive approach to compliance. Not only is it now fulfilling all the requirements of RTS22 Article 15, it is also taking full control in improving the quality of its reporting data, whilst benefitting from efficiency gains.
With the implementation of our assurance solutions, the client has moved to an exception-based process. 100% of records are checked for errors, omissions, over- and under-reporting, and reconciled against NCA data. This allows for quick and efficient remediation, in-line with the expectations of regulators.
In partnership with RegTek.Solutions, the client has been able to establish a new standard for reporting across its trading venues. This new infrastructure will not only future-proof its operations for regulatory change, but also allow them to focus on the growth and expansion of their core trading business.
To learn more about how RegTek.Solutions can help you control your transaction reporting, contact [email protected]