Key changes proposed by FCA on MiFIR Transaction Reporting

The FCA’s CP 25/32 has landed and at nearly 200 pages, its full impact will take some time to digest. We were all expecting proposals to tune the obligation to suit the UK market, as well as steps to improve data quality and a reduction in the reporting burden on firms. And that is what it has delivered.

But I think it is fair to say that the consultation proposes a more sweeping modernisation of the UK’s transaction reporting framework than was expected. A full read confirms that the proposed reform marks the most significant overhaul since transaction reporting was introduced.

Here is a short summary and we’ll be taking a deeper dive over the coming weeks to fully grasp the finer details:

1. Fewer reporting fields, leaner data requirements

One of the headline changes is the reduction of transaction reporting data fields from 65 down to 52. This streamlining is designed to remove low-value data while maintaining the information needed to detect market abuse. The FCA is also proposing a reduction of instrument reference data fields from 48 to 37, alongside the removal of the obligation for systematic internalisers (SIs) to submit instrument reference data.

2. Smaller instrument universe

Another major shift is the removal of circa six million financial instruments – those only tradeable on EU venues – from the UK’s reporting scope. This re-scoping is expected to significantly shrink the volume of daily reports while aligning the UK regime more closely with the structure of domestic markets.

3. FX derivatives out, shorter back-reporting period

The consultation also proposes to eliminate FX derivatives from transaction reporting entirely, removing a category that currently generates high reporting volumes but low regulatory value. In addition, the FCA plans to shorten the back-reporting window from five years to three years, reducing the long-tail workload of historical corrections.

4. Smarter reporting through conditional single-sided logic

The true impact of the above proposal is unclear at this stage but the expansion of conditional single-sided reporting will be welcomed by some. It is not as extensive as the much loved portfolio manager’s exemption but it should have a beneficial impact on some firms.

We are looking forward to participating in the debate with our clients and trade associations over the coming months. Please look out for a more detailed summary shortly!  

For a conversation with Matthew or one of our regulatory experts about the FCA’s proposals, please get in touch.