Over £100m in savings have been set out by the Financial Conduct Authority (FCA), as the regulator proposes to streamline transaction reporting requirements.
The FCA receives over seven billion MiFID transaction reports a year used to support the “cleanliness, transparency and resilience of UK markets”.
The current annual cost of MiFID transaction reporting to the industry is £493m.
To reduce costs for firms, support growth and improve the quality of data received, the FCA has proposed:
- Removing foreign exchange derivatives from reporting requirements, reducing costs for over 400 firms.
- Removing reporting requirements for six million financial instruments including equities, bonds and certain derivatives that are only traded on EU trading venues.
- Reducing the period for correcting historic reporting errors from five to three years, lowering the number of transaction reports that need to be resubmitted by a third.
The FCA will work with the Bank of England and the Treasury to remove any unnecessary duplication of transaction and post-trade reporting requirements as part of a new long-term approach.
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 transaction reporting rules were introduced in 2018 and onshored from the EU on 31 December 2020.
Recently, the FCA launched a consultation on proposals to introduce a UK equity consolidated tape to help increase capital investment and liquidity in equity markets.
The city watchdog said that equity trading in the UK is spreading across multiple trading venues, “sparking competition, innovation and lowering the cost of trading”.
However, the issue behind this is that it can also make it “challenging for market participants to assess overall market liquidity, causing it to be underestimated”.
A consolidated tape is a single, centralised feed of real-time trade and price data for shares traded across all UK venues.
