Should you be transaction reporting to the FCA?

With the constantly evolving stipulations surrounding regulatory reporting, some firms have found it difficult to understand whether they are required to transaction reporting. Getting this wrong can result in wasted time and/or fines and most importantly loss in reputation.

The FCA’s Transaction User Pack (TRUP) states when a firm executes a transaction in an instrument that is reportable as per the previous section, either directly with an execution venue or on its own account, it needs to report that transaction to the regulatory body. In addition, the FSA requires the identity of the ultimate client on whose behalf the transaction is carried out, or the identity of the firm dealing with the ultimate client. There are further provisions in the TRUP for firms providing a portfolio management and Direct Market Access (DMA facilities).

In circumstances where there is confusion as to the status, the best approach is always to confirm with the FCA’s policy unit. In some cases there may be some hesitation at approaching the regulatory body directly, in which case firms can use a prospective ARM as an intermediary, thereby retaining a level of anonymity in the initial investigations.

The TRUP also states that branches of firms in the UK based in other EEA countries should report to the relevant authority within that country. Each European regulatory body, whilst broadly adhering to the spirit of the MiFID directive, has different interpretations on who can report, and how they can report. The concept of an ARM is not replicated by other regulatory bodies, but they do accept that transaction reports may be submitted on behalf of firms by third parties. It is therefore logical that firms who wish to have a centralised and efficient view of all transactions being reported across the multitude of firms should look at ARMs that take in reports from multiple countries if necessary, standardise them into a central view, and then in turn make them available to the relevant authority in the required format.