10 Tips for achieving MiFID II/MiFIR transaction reporting accuracy

As we move away from the formative MiFID II years, it’s time to review how to improve reporting accuracy. For most companies, the nuts and bolts are in place for reporting MiIFID II and the focus can shift away from implementation issues (finally!). Part of that this shift involves implementing CAT (Complete, Accurate and Timely) reporting principles which align to:

  • ESMA’s requirement in Article 26(1) of MiFIR which states that investment firms which execute transactions shall report “complete and accurate details” of such transactions.
  • Mark Steward, FCA Executive Director of Enforcement and Market Oversight commenting on the FCA fining UBS AG £27.6 million for transaction reporting failures said, “Effective market oversight relies on the complete, accurate and timely reporting of transactions.

At the heart of transaction reporting accuracy lies rejection handling and identifying problem areas. Trades can be rejected for a number of reasons, many of which are easily solved with the right tools to identify the reason. In our experience, these are the top 10 rejection reasons, many of which are published by the FCA in their Market Watches.

  1. Invalid ISIN
    This can be due to a trade being reported with an incorrect or invalid ISIN; or a symbol missing the ISIN or underlying information. The error can occur if a reported ISIN isn’t on the FIRDS list, or there is a mismatch between the ISIN and the reported underlying trading venue. The latter is common when a parent MIC code is used vs its operation MIC code.
  2. Invalid national client information (NCI)
    MIFIR requires the NCI data of private individuals that were party to a trade. Each EU country has a separate hierarchy for which identification information needs to be reported. Using incorrect IDs will result in rejection messages from the NCA or ARM.
  3. Missing net amount
    Frequently, a transaction’s net amount is not provided.
  4. Duplicate transaction
    Another reason why a trade would be rejected is when a duplicate transaction reference number is reported and not cancelled.
  5. Incorrect Trading Capacity
    Entering incorrect trading capacity to align with an Investment Firm’s trading actions.
  6. Buyer/Seller mismatch with trading capacity
    Use of Executing Entity LEI in buyer/seller fields when AOTC/MTCH capacity is used. Or, lack of entering Executing Entity LEI when entering DEAL capacity.
  7. Transaction report does not exist or is already cancelled
    This type of rejection occurs when a modification or cancellation message is entered for a Transaction Reference Number that does not exist or was terminated.
  8. Invalid LEI entered (for a party)
    When the LEI is either invalid, missing or expired, the information needs to be corrected in customer systems.
  9. Instrument classification identifier is incorrect
    This error refers to an erroneous CFI code that doesn’t match its ISIN code.
  10. Incorrect prices
    Failure to convert trades in minor currencies to major currencies such as GBp executions to GBP prices on report submissions

Using technology to improve reporting accuracy
It’s advisable to implement reporting controls and monitoring into your regular transaction reporting processes. These will help you easily identify reporting issues and reduce the number of trade rejections. With today’s regulatory reporting solutions that capitalize on the latest technology, you can take advantage of user-friendly reporting dashboards that surface any reporting errors (some even provide at-a-click tips on how to fix the errors yourself) and get instant data insights that you can use to ensure a full feedback loop and comparison to peers.  With consistency and correction of errors, your reporting accuracy will see a significant improvement over time.

To learn more about how to improve your reporting accuracy, contact us here.

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Trudy Namer
About the author: Trudy Namer
As Director of Marketing at Global Regulatory Reporting Solutions, S&P Global Market Intelligence, Trudy leads the global marketing strategy for the Global Regulatory Reporting organization. Capitalizing on over 15 years of B2B and financial services marketing experience, Trudy specializes in all aspects of marketing including branding, lead generation, digital marketing, public relations, thought leadership positioning and content creation. Trudy holds a Business of Commerce degree (Cum Laude) from the University of South Africa and a Master of Business Administration (MBA) from Bar Ilan University, Israel.