Transaction Reporting: A Common Good, Commonly Wrong
Startling findings delivered by ARRMA (ACA’s Regulatory Reporting Monitoring & Assurance solution) have detected that most firms are struggling with their transaction reporting obligations under MiFIR / EMIR.
Results reveal more than 6 million transaction reporting errors identified across a sample of 30 review projects, averaging 200,000 errors per review. This means that regulators are not receiving the data they need to successfully identify market abuse and systemic risk.
With the FCA repeatedly stating that complete and accurate data is “critical” and the European Systemic Risk Board describing it as “fundamental” and “a common good”, errors across multiple reports could not only lead to undetected market abuse or systemic risk – but also pose significant financial, reputational and compliance risk for firms reporting inaccurately.
These findings build upon our previous ARRMA research that found that 97% of firms reviewed were submitting reports under MiFIR/EMIR containing material inaccuracies in 2021.
There’s also evidence to suggest that firms either remain naive around their reporting obligations, have misplaced confidence the quality of their reporting, or simply don’t know that they’re in breach. Results from a Freedom of Information (FOI) request from the FCA, that we submitted in 2021, revealed that the number of errors and omissions (E&O) forms submitted by firms – whereby firms admit reporting mistakes to the regulator – was on average just three per year. Meanwhile, a worrying 87% of firms say they are confident in the quality of their reports.
Commenting on these findings, Matt Chapman, Managing Director and Co-Lead of our (ARRMA) Service, said: “We’ve been warning firms for some time that transaction reporting needs close and ongoing monitoring. Our continued research shows that there remains a clear disparity between perception and reality, with many firms believing that their reporting is accurate, despite the data suggesting otherwise. The longer it takes firms to realise they have a problem, the more expensive and time consuming it becomes to fix and the more embarrassing the conversation with the regulator becomes.”
Charlotte Longman, Director and Co-Lead of our (ARRMA) Service added “It’s vital that firms prepare for increased regulatory scrutiny in the months ahead as the FCA has hinted that it will be combatting persistent reporting failings by taking action against firms which are not taking sufficient action to remedy their errors. With MiFID II recently reaching its four-year anniversary, it’s becoming a question of ‘when’ and not ‘if’ we start hearing about firms being fined or censured.”
We can help
Over the past year, we’ve noticed a significant reduction in errors experienced by our clients who have applied our ARRMA solution, which incorporates technology with specialist consulting oversight. It’s this unique blend of human and machine that makes it possible for firms to quickly identify and remediate transaction reporting errors before they are identified by the regulator, and has seen firms increase their accuracy, on average, by 95% once the consulting recommendations have been implemented.
ARRMA identifies transaction reporting errors and provides practical advice/support to resolve them. This regular, cost-effective solution is designed to analyse the data included in your firm’s reports and identify issues relating to the accuracy, completeness and timeliness.
Book a free review
Take advantage of a complimentary one-time ARRMA reporting analysis to help identify the percentage of your reports featuring an error.
This complimentary analysis will help you get an independent overview of the health of your reporting framework. It includes a summary report identifying, among other things, the percentage of reports submitted that include an error and the number and type of errors affecting those reports.
Transaction Reporting: Man vs. Machine - watch on-demand
97% of firms are getting their transaction reporting wrong! Is there too much dependence on tech to automate this process. Watch our recent panel session where we pit man against the machine to find out who or what is the ultimate regulatory reporter.