Technology for MiFID II Reporting

With the final compliance date for MiFID II and MiFIR looming fast, for 3 January 2018, no firm should be delaying getting its reporting systems into placed ahead of that deadline.

MiFID II greatly extends what you need to report on, as it now covers almost all financial instruments. Here’s a quick overview of what firms must report and when:

  • Weekly aggregate reports – aggregated breakdowns of positions for different trades
  • Daily position reports – these must detail all persons’ positions on a trading venue
  • Daily participant reports – persons trading on a UK trading venue must compile a daily report on their own positions, plus their clients’ and clients of clients’ positions
  • Daily OTC reports – UK firms trading outside a trading venue must report their own positions, plus their clients’ and clients of clients’ positions

Key information within these reports includes matters such as the date of the trading day, the date and time the report is submitted, whether the report is new, amended or cancelled, the reporter’s unique identifier reference number and the e-mail address of the position holder.

Bear in mind that as well as these detailed reports, firms must also comply with data protection laws. The new General Data Protection Regulation (GDPR) comes into force on 25 May 2018 and places a bigger burden on companies than the existing regulations.

MiFID II – Reporting

MiFID II reports are likely to have some overlap with other European regulations such as the Market Abuse Regulation (MAR), the regulation on Securities Financing Transactions (SFTR), the Regulation on Wholesale Energy Markets Integrity and Transparency (REMIT) and EMIR. So it makes sense when considering what reporting technology to use for MiFID II whether your chosen system can also generate reports for these other regulations.

Firms are also likely to be aggregating source data from different locations and different systems. A technological reporting system needs to be capable of integrating and consolidating data from multiple sources into one report – quickly and accurately. It must be agile, so that it can be adapted to any new reporting requirements – and with MiFID II this is quite likely once it has rolled out next January and the regulators start to tweak it.

Transparency lies at the heart of MiFID II. Any quality platform for reporting should offer mechanisms for comprehensive audit trails. For data consistency across different reporting periods, firms need to be able to compare versions and changes to each item of data and each filing, and able to retrieve prior entries where needed.

Your chosen reporting system needs to be secure, with administrators being able to control access. You should also look for a platform that can be scaled automatically and that has inbuilt disaster recovery.

DataTracks’ technological solution for clear efficient reporting is MiFID II-compliant and uses an XML interface that looks like a spreadsheet and makes it easy to input data either by exporting and importing, or by manual entry. Reviewing and commenting on entries is also simple. It is hosted on a private cloud, so is totally secure, and offers all the above capabilities so that your firm can be confident it is managing all its data in the manner that MiFID II requires.

Lastly, one of the new transparency requirements is for firms to record telephone calls, whether by an employee directly involved in trading or someone providing advice that could lead to a client entering a trade. The FCA is not yet clear on what sort of call volume a firm should be monitoring, although the figure of 20% has been mooted. Firms should be looking to invest in cloud-based technologies that make it easy to record and store calls.

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