On 15th November 2024, the FCA published a discussion paper that has significant implications for transaction reporting in the UK.
According to MAP FinTech, the authority is considering several amendments to the current regime, with MAP FinTech already poised to submit a comprehensive response to the FCA’s consultation.
The FCA’s proposed modifications are not exhaustively listed, yet they signal a shift towards alignment, albeit less stringent than what the European Securities and Markets Authority (ESMA) might propose. This includes the potential inclusion of new data fields in the reporting requirements.
Significantly, the FCA plans to extend the MiFIR reporting obligations to Alternative Investment Fund Managers (AIFMs) and UCITS Management Companies. These entities will need to report transactions if they provide non-core services like discretionary portfolio management, investment advice, and the safe-keeping and administration of shares or units in collective investment undertakings.
Another notable proposal is the integration of a Universal Product Identifier (UPI) for securities under UK MiFIR Articles 26(2)(b). The FCA is contemplating the adoption of a standard UPI, as well as a modified version, UPI+, to better cater to the specific needs of the UK market.
In addition, the FCA aims to adopt the ISO 24165 Digital Token Identifier for Distributed Ledger Technology (DLT) securities and financial instruments backed by crypto-assets. This move would facilitate the identification of tokenised securities and align with global standards like the DTIF codes for derivatives on crypto assets.
The consultation paper also suggests the introduction of a new field in transaction reports to categorise clients or counterparties as either ‘Retail Client’ or ‘Professional’. This classification will help provide clearer data on the nature of each trade’s counterparty.
The FCA is also exploring ways to reduce reporting burdens, especially for smaller firms that find compliance costly and challenging. They are seeking feedback on how to eliminate redundancies with other reporting frameworks, such as EMIR, which often overlap with MiFIR requirements.
Lastly, the FCA is encouraging feedback on the use of new technologies and alternative messaging standards, like JSON, to potentially enhance the efficiency of transaction reporting. The authority is open to suggestions until 14th February 2025, aiming to refine and optimise the reporting process in response to industry needs.
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