Almost 400 entities in the UK that were subject to capital markets rules known as ‘MiFIR’ had problems with transaction reporting last year and notified the financial regulator.
Data obtained by consultancy Duff & Phelps under the Freedom of Information Act shows many firms reported MiFIR-related problems to the Financial Conduct Authority (FCA) in 2018, sometimes on more than one occasion.
An expert warned there could be systemic problems with firms’ reporting processes and that fund managers might even be unaware of their own failings.
Nick Bayley, managing director within Duff & Phelps’ compliance and regulatory consulting practice, said: “Despite the large percentage of UK investment firms which have notified the regulator of issues with their reporting, there are likely many more firms, particularly on the buy-side, that are unaware that they are reporting incorrectly. I suspect the true number of firms with reporting errors is much higher. The data also shows that many firms notified the FCA on more than one occasion, suggesting that there could be systemic issues with some firms’ reporting processes.”
He added: “Incomplete or inaccurate transaction reporting by firms means the regulator is more likely to miss instances of potential market abuse.”
MiFIR – the Markets in Financial Instruments Regulation – relates to pre-trade transparency around investments such as exchange-traded funds and structure finance products.
The problems with reporting in 2018 were described as “widespread”. The FCA processed around seven billion UK MiFIR transaction reports throughout last year and the entities that notified the regulator of MiFIR reporting problems make up 10% of the 3,784 UK investment firms required to be compliant.
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