On Friday 15 November, the UK Financial Conduct Authority (FCA) published a discussion paper on improvements to the UK’s transaction reporting regime.

The FCA aims to improve the usefulness of transaction reporting data and ensure requirements remain proportionate for firms. It seeks views on areas including:

1. Unnecessary reporting burdens

• The FCA notes that UK EMIR, UK SFTR and UK MiFIR serve individual regulatory purposes and, given significant changes were made to the UK EMIR regime in September 2024, it is not the right time to begin a comprehensive review to remove all duplicative reporting requirements.
• Potential changes include considering the scope of the transaction reporting regime, the role of the ISO 4914 Unique Product Identifier (UPI) in transaction reporting, aligning field content and reporting rules for specific types of financial instrument and removing duplicative reporting requirements that exist in the UK MiFID trade and transaction reporting regimes.

2. Challenging aspects of the transaction reporting regime

• For example, sourcing data, maintaining records, understanding requirements, applying systems and controls to ensure the quality of the data, dealing with exceptions and correcting errors.
• The FCA will consider removing requirements where it receives limited benefit from data.

3. Bringing AIFMs and UCITS management companies into scope of the transaction reporting regime for their MiFID activities

• The FCA is unclear whether the additional cost of reporting imposed on these firms would be justified by the benefit of the data the FCA would receive.

4. Introducing an opt-in register of UK investment firms that are willing to act as a ‘receiving firm’

• The FCA will also consider changes such as (i) allowing UK investment firms to act as a ‘transmitting firm’ and benefit from the provisions in Article 4 of RTS 22 when dealing on their own account or acting in matched principal trading capacity; and (ii) permitting UK MiFID investment firms (including UK branches of third country investment firms) to act as a receiving firm for non-MiFID investment firms.

5. Potential guidance on determining whether a financial instrument is traded on a trading venue (TOTV), particularly for OTC derivatives

6. Potential guidance on which activities should trigger the obligation to submit instrument reference data and removing the requirement for systematic internalisers

7. The role the FCA could play to support the development of new and existing technologies

• For example, ensuring that regulatory reporting enabled by technologies such as distributed ledger technology are not hampered by FCA rules.
• The FCA welcomes feedback on whether messaging standards such as JSON could be adopted to improve data quality and reduce reporting burdens.

The FCA states that the UK may not align with the EU’s MiFIR Review transaction reporting changes and that further divergence is likely.

The FCA invites feedback until 14 February 2025. A consultation paper with proposals will be published in 2025.

If you have any questions, please contact Aniqah Rao.