Direct Transaction Reporting to the FCA - Frequently Asked Questions (FAQs)

Since we launched QomplyDirect in January 2023, we have seen tremendous interest from firms wishing to have more control in their regulatory reporting and costs.

To this end, we have prepared Frequently Asked Questions to address many of the questions our clients ask us when enquiring about QomplyDirect and reporting directly to the regulator.

Q: “I DIDN'T KNOW FIRMS COULD REPORT DIRECTLY TO THE REGULATOR. ARE YOU SURE THIS IS ACCEPTABLE TO THE FCA AND ESMA?" - IS ONE OF THE MOST COMMON QUESTION WE RECEIVE

Article 26(7) of both ESMA and UK MiFIR, states that investment firms have the option to submit transaction reports directly to the regulator or to utilise an ARM.

The FCA website provides useful information on the cost and onboarding process.

Q: IF FIRMS CAN SUBMIT DIRECTLY TO THE REGULATOR, WHY DIDN'T MORE FIRMS ELECT TO DO THAT IN 2018?

We know that many firms grappled with understanding the regulatory technical standards, the concept of “reportable instruments”, “over/under reporting”, and the challenges of enriching transaction data in the lead up to MiFID II go-live.

They recognised the value of utilising an ARM as it provided the comfort of offering enhanced logic to check reportability, filtering non-reportable items, and enriching transaction data. Since ARMs were regulated entities, there was also a perceived sense of security should regulatory scrutiny arise. Certainly, for smaller firms lacking in-house technology, ARMs also offered a validation component that ensured compliance with the 250 validation rules set by ESMA.

Furthermore, firms were scrambling to meet the MiFID II deadline and recognised the value of outsourcing to third-party suppliers as it allowed them to focus on core business needs and to maintain the continuity of their trading operations.

Q: HOW MUCH DOES IT COST TO REPORT DIRECTLY TO THE REGULATOR?

The FCA charges a one-off onboarding fee of £25,000 with no annual costs. There is also no concept of price-per-transaction or additional back-reporting fees when reporting directly to the regulator.

Q: HOW DOES QOMPLYDIRECT HELP?

QomplyDirect serves as a versatile tool, capable of both strategic and tactical applications. The firm itself is responsible for submissions and QomplyDirect is a tool that the firm uses to facilitate the submission process.

QomplyDirect streamlines the submission process, conducting comprehensive validation and accuracy checks, filtering non-reportable instruments, enriching data, and facilitating seamless submissions to the regulator. Where there are exceptions, the platform highlights these in real-time and enables effortless re-submission. It also features a user-friendly dashboard that provides immediate actionable insights including confirmation that reports have been successfully submitted.

Firms may utilise QomplyDirect tactically to establish their technical infrastructure for managing transaction submissions. Alternatively, it can also be integrated strategically into the firm's Systems and Controls frameworks. What sets our platform apart is the complete automation of the end-to-end process, a feature not offered by ARMs.

QomplyDirect seamlessly integrates with other solutions from Qomply, such as Quality Assurance and Reconciliation tools, to deliver a comprehensive end-to-end reporting solution, allowing firms to meet the requirements set out in the RTS for submission, reconciliation, and back-report, where necessary.

Notably, Qomply is renowned for its award-winning Quality Assurance and Reconciliation tools, which outperform other solutions available in the market.

Q: HOW WOULD I RECONCILE MY TRANSACTIONS WHEN DIRECT REPORTING?

When submitting reports directly to the regulator, the reconciliation process switches from a three-way reconciliation to a two-way reconciliation, since there is only one end-point between the firm and the regulator. (This assumes that there is not another submitting entity that is sending transactions to the regulator on behalf of the firm) Qomply offers a reconciliation module that can automate reconciliations, simplifying the process for firms and ensuring compliance with the relevant regulations.

Q: IS DIRECT REPORTING TO THE REGULATOR BECOMING A TREND?

As more than five years have passed since the MiFID II Go-Live, firms are increasingly seeking strategic investments and fortifying their own infrastructure. High fees associated with transaction reporting have prompted firms to seek greater control over costs. When you combine the daily "business as usual" expenses with the punitive back-reporting fees, a discernible trend emerges, with firms handling larger transaction volumes shifting towards direct reporting to the regulator.

To explore the benefits of reporting directly and determine if this is a cost-effective option for your firm, contact Qomply. We are happy to discuss your current reporting needs and present you with a range of tailored options.

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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