The FCA has outlined a series of proposed changes to UK transaction reporting rules that it claims could save firms more than £100m annually.
The regulator currently receives over 7bn MiFID transaction reports every year, using this data to help maintain market transparency, detect financial crime and assess overall market resilience. However, the FCA says the current system places unnecessary cost burdens on firms and may not deliver the most efficient data for supervisory purposes.
To address this, the FCA has recommended a number of amendments designed to simplify reporting obligations while improving data quality. One of the most significant proposals is the removal of foreign exchange derivatives from the transaction reporting regime. This change alone is expected to reduce costs for more than 400 firms by removing an entire category of instruments from their reporting scope.
The FCA is also seeking to eliminate reporting requirements for around 6m financial instruments, including various equities, bonds and certain derivatives that are traded exclusively on EU venues. Under the current rules, these instruments require reporting despite the fact they fall outside the UK trading ecosystem. The regulator argues that excluding them will lower costs and reduce unnecessary reporting activity.
Another key change involves shortening the mandatory period for correcting historical reporting errors. At present, firms must resubmit corrected data up to five years after an error is identified. The FCA is proposing to reduce this correction window to three years, a shift that could lower resubmission volumes by roughly a third and remove a significant operational burden for market participants.
Explaining the rationale behind the overhaul, FCA joint executive director of enforcement and market oversight Therese Chambers said: “Transaction reports are essential, helping us to detect financial crime and monitor the resilience of our markets. But we can be smarter, and by clarifying and streamlining requirements we expect to receive more accurate and complete reports.
“Reducing costs while improving the quality of the data we receive is a no-brainer. It means we can support growth and receive better market intelligence to act on.”
The FCA confirmed that it will continue working closely with the Bank of England and the Treasury as part of a long-term plan to eliminate duplication between transaction and post-trade reporting frameworks. The goal is to ensure that future requirements are proportionate, efficient and aligned across the UK regulatory landscape.
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