EMIR and SFTR require regulated firms to submit transaction reports to a registered Trade Repository (TR) while MiFIR requires regulated firms to submit transaction reports to their National Competent Authorities (NCAs), either directly or via an Approved Reporting Mechanism (ARM).
The importance of data quality for Regulators
CySEC, FCA and other EU regulators have incorporated data quality reviews into their supervisory programme by conducting desk-based analyses and on-site inspections of counterparties.
In this respect, the FCA has included in Market Watch 59 and 62 a list of common errors observed in MiFIR transaction reports and highlighted the importance of firms maintaining adequate systems and controls to ensure transaction reports are complete and accurate. A similar approach was followed by CySEC via the issuance of Circular C356.
Furthermore, more recently, the FCA published a Dear CEO letter referring to the fact that several firms incorrectly classify financial transactions as falling within the prudential matched principal exemption. A wrong understanding of a firm’s FCA permission may impact the correctness of the reported ‘trading capacity’ field as well as the quality of the overall reporting.
As regards EMIR, in late 2019 ESMA published its findings for the peer review it conducted into the supervisory actions of six NCAs (including the FCA and CySEC). ESMA expects NCAs to integrate an assessment and analysis of EMIR data quality into their overall supervisory approach. In light of ESMA’s EMIR peer review, the FCA and CySEC have already begun to intensify their supervisory review in this area. Moreover, CySEC issued Circular C291, which details the outcome of its review of the quality of data reported to TRs under EMIR.
What regulated firms should do
- Review the outstanding EMIR positions reported to Trade Repositories in accordance with the relevant technical standards;
- Ensure the pairing of trades when both counterparties have an obligation to report;
- Perform reconciliations between back office data and data reported under EMIR, SFTR and/or MiFIR;
- Ensure that EMIR, SFTR and/or MiFIR reports are submitted on time, all the necessary reporting fields are completed and the data reported is accurate;
- Monitor their reporting arrangements by assigning a responsible person, and;
- Identify any issues and take appropriate remedial actions.
How can MAP S.Platis assist you?
- Offer customised health-check/assurance reviews
- Provide answers to queries (Q&A service);
- Provide tailored immediate rectification measures best-suited for each firm’s operational model
- Offer advice on policies, controls and procedures relevant to transaction and trade reporting;
- Update your compliance monitoring programme;
- Train staff members on issues related to MiFIR, SFTR and EMIR;
- Assist with structuring and carrying out proper reconciliations;
- Help you notify to the FCA and/or CySEC reporting errors and omissions and setup an adequate remediation plan;
Why MAP S.Platis?
MAP S.Platis is the leading financial services consulting group in Cyprus with clients that include regulators, banks, funds and fund managers, investment firms, insurance companies, and payment and electronic money institutions. Our expert team provides unique and tailored solutions in licensing, regulatory compliance, risk management, internal audit, human resources, banking, regulatory technology, executive training and innovation consulting to financial institutions in Cyprus and the EU. Thanks to our vast regulatory compliance experience supporting local and international financial services institutions, continued interaction with regulatory authorities, multidisciplinary and diverse team of professionals, unparalleled track record, global network of associates and wealth of resources, our internationally recognized and award-winning firm can support any client’s regulatory needs, both efficiently and effectively.
For more information on our regulatory consulting services, please contact our team of experts at +357 2535 1335 or via email at email@example.com