MiFID Transaction Remediation

Exploring Cost-Effective Back-Reporting Options for Transaction Reports

15 November 2023

At some point, firms that submit transaction reports will inevitably find themselves remediating their historic transactions. Many firms routinely engage in remediation efforts to enhance their reporting framework.

An average-sized investment firm typically back-reports more than 100,000 transactions annually. Larger firms may back-report millions of transactions, depending on the duration and scope of their errors.

Historical data from 2018 to 2020 suggests that over 50 percent of firms inaccurately reported their transactions. This indicates that many firms have either already undertaken or will soon need to engage in back-reporting. With the active 5-year window for correction closing, firms are now prioritizing their remediation projects.

Challenges with ARMs Fees

Following the conclusion of remediation projects, many firms are surprised to discover that their Approved Reporting Mechanisms (ARMs) charge punitive fees for back-reporting or re-submissions. This is partly because ARMs have discretion in assigning back-reporting charges, which fall outside the typical fees for daily reporting and beyond the scope of regulators to regulate pricing.

Cost-Effective Back-Reporting Options

The cost-effective options for back-reporting depend on transaction volume, technology strategy, and timing. Here are two viable options:

1. Back-Report via Another ARM Under a "One-Off" Arrangement

There are no regulatory restrictions on using a different ARM for back-reporting. Utilising a different ARM than the one used for daily reporting can lead to savings of up to 50 percent compared to the fees charged by the current provider. The onboarding process for a new ARM is straightforward, and the new ARM will support your existing ARM file format, allowing firms to quickly resume operations. There is no ongoing subscription required. Qomply has arranged a partnership with an ARM exclusively for back-reporting purposes. We encourage firms to get in touch with us as the potential savings can be substantial.

2. Back-Report Directly to the Regulator

Firms with larger transaction volumes may opt to report directly to the Financial Conduct Authority (FCA). Once a firm is onboarded to the FCA Market Data Processor (MDP) Submission portal, they can choose to use this connection for back-reporting. Alternatively, firms may transition to direct reporting over time or when their current ARM subscription expires. This approach offers the most significant cost savings for firms with an annual transaction volume exceeding 500,000 transactions. Some firms have reported savings of over 80 percent, and there's a growing trend among larger firms to migrate to direct reporting. It's worth noting that other National Competent Authorities (NCAs) also offer direct reporting, making it not exclusive to the UK.

For more information on any of these options, please contact Qomply, and we will be happy to guide you through the details.

About Qomply

Qomply takes away the pain by getting transaction reporting right the first time.

Qomply’s technology automatically executes a sophisticated matrix of rules and scenarios across reports from field-level to business-logic level. With thousands of validation rules, Qomply easily exceeds the 250 validation rules set forth by the regulators.

Firms are empowered to conduct real-time checks as well as retrospective checks – making Quality Assurance, Remediation Exercises and Day-to-Day reporting straightforward.

Qomply’s easy-to-use dashboard empowers firms to send their reports directly to the regulator – bypassing costly fees with efficient, straight-through processing power.

This all leads to the fewest number of steps in the pipeline of reporting and ensuring reports are right the first time.

For more information, please contact Qomply, on +44 (0) 20 8242 4789 or info@qomply.co.uk

Follow Qomply on social media on Twitter (https://twitter.com/QomplyRegTools) and LinkedIn (https://www.linkedin.com/company/qomply/)

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