Following concerns raised by the FCA over the failure of several investment firms to reconcile front-office records with its official data samples, BEST EXECUTION speaks to AutoRek and SteelEye on the fundamental importance of accurate transaction reporting.
After contacting a number of firms who have not been making regular data extract requests, the regulator learned that these firms were not aware of the Market Data Processor (MDP) Entity Portal, or that they were relying on data extracts provided by account reconciliation managers (ARMs) to conduct their reconciliations.
“The FCA has rightly reinforced the importance of transaction reporting reconciliations,” said Matt Smith, CEO of SteelEye. “Ultimately, the market monitoring capabilities of the UK regulator are best supported by accurate reporting data, and reconciliations are essential for firms to ensure that reporting has been done correctly.
“It is concerning that certain firms are not making regular extracts from the FCA portal as firms are required to reconcile front-office records with data samples provided by the FCA (under Article 15(3) of RTS 22). This is vital so that firms can cancel and submit new reports where errors or omissions are identified.”
The regulator outlined that firms are required to reconcile front-office records with data samples provided by the FCA under Article 15(3) of RTS 22. Additionally, firms are required to submit a transaction reporting breach notification under Article 15(2) of RTS 22 and SUP 15.3.11R.
Additionally, where errors or omissions are identified in transaction reports, the firm reporting the transaction must cancel the report and submit a new corrected report to the FCA.
The FCA said 745 firms made data extract requests last year while 346 submitted breach notifications.
Speaking to BestEx, CASS business consultant at AutoRek, Murray Campbell, said: “The FCA’s newsletter reaffirms the importance of firms accurately reporting their transactions. An essential component of this is carrying out regular reconciliations to ensure a report is accurate. In requiring firms to use a sample of records from the FCA, the regulator can see which firms are failing to comply.
“Given the high volume of trades firms execute and the need to check the accuracy of numerous data points, there is an increasing need to implement automated reconciliation solutions to meet this requirement.”
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