FCA nd Bank of England Launch Taskforce to Reform UK Post-Trade Reporting Framework

The Financial Conduct Authority (FCA) and the Bank of England (BoE) have launched a new taskforce to develop a streamlined and harmonized framework for transaction reporting. This initiative invites market participants to express their interest in joining the taskforce, aiming to enhance the efficiency of post-trade reporting processes.

Presently, transaction reporting in the UK is governed by various regulatory laws, notably the UK Markets in Financial Instruments Regulation (MiFIR), the UK European Market Infrastructure Regulation (EMIR), and the UK Securities Financing Transactions Regulation (SFTR). The taskforce will work towards minimizing redundancy in these regulations while ensuring reporting requirements yield significant insights that adhere to legal objectives.

As part of this initiative, the FCA has outlined principles aimed at long-term data collection regarding transactions and post-trade activities. The taskforce will foster a collaborative space for various industry stakeholders to provide feedback and suggestions concerning the objectives set forth. It will consist of three specialized working groups: a main Policy group, a Strategy group, and an Architecture group.

The Policy group will focus on identifying opportunities to harmonize data collection under the existing regulations, reviewing feedback on proposals designed to simplify reporting processes. Meanwhile, the Strategy group will leverage industry insights to explore how this harmonization can aid reporting firms. The Architecture group will examine ways to utilize modern technology and data structures to streamline transaction and post-trade reporting.

It is important to note that this taskforce will not have formal decision-making authority and will not serve in an advisory capacity. The outputs generated will not be binding on either the BoE or FCA. Members of the taskforce will include a diverse selection of senior representatives from firms involved in transaction and post-trade reporting, comprising a maximum of 50 members. Representation will also include both the FCA and BoE, alongside additional attendees invited on an as-needed basis.

Taskforce membership will span an initial term of 18 months, after which the Taskforce Steering Committee will review the composition to ensure a balanced mix of perspectives and expertise. The MiFIR transaction reporting rules were implemented in 2018 and were transferred from the European Union framework after Brexit on December 31, 2020. The UK Treasury has indicated plans to repeal these rules in light of recent developments.

An earlier consultation paper from the FCA addressed the objective of alleviating regulatory burdens on firms while promoting economic growth in the UK. This paper suggested removing the reporting obligations for six million financial instruments exclusively traded on European Union venues, as well as excluding foreign exchange derivatives from reporting requirements. Such changes are projected to reduce costs for over 400 UK-based companies.

Transaction reports are submitted by firms to the FCA on a ‘T+1’ basis, meaning they are filed one day after the completion of a trade. These reports encompass various financial instruments and include vital information such as buyer and seller identities, transaction prices, and trading venues. The data generated from these reports is essential for the FCA in its efforts to combat financial crime, nurture sustained economic growth, and enhance regulatory efficiency. Though not publicly accessible, these reports serve as critical tools in identifying, investigating, and preventing market abuses.

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