The UK’s Financial Conduct Authority (FCA) has announced plans to simplify transaction reporting requirements, aiming to save firms £100 million annually.
The regulator intends to eliminate reporting requirements for foreign exchange derivatives and six million financial instruments, including equities and bonds traded solely on EU venues. Additionally, it seeks to shorten the correction period for historical reporting errors from five years to three, potentially reducing the volume of resubmitted transaction reports by one-third.
This initiative aims to decrease the overall cost of managing over seven billion MiFID transaction reports per year from nearly £500 million to around £400 million. Therese Chambers, joint executive director of enforcement and market oversight at the FCA, emphasized the importance of accurate transaction reports for detecting financial crime and monitoring market resilience. She stated, “By clarifying and streamlining requirements, we expect to receive more precise and complete reports.”
Despite these changes, some industry stakeholders feel the reforms do not go far enough. Hedge funds advocated for completely removing reporting requirements for buy-side investors, similar to practices in the US and Japan. The FCA rejected this request, citing the UK’s “international nature,” where more than half of transactions involve buy-side firms.
Adam Jacobs-Green from the Alternative Investment Management Association expressed disappointment that UK fund managers will still be subject to transaction-reporting rules. Rollo Burgess, a partner at Capco, praised the reforms but cautioned about the potential operational risks associated with differing regulatory environments. He noted that managing such regulatory divergence could introduce complexity, countering the proposals’ original intention.