Market Watch 78

In this edition, the FCA shares their observations about the completeness and accuracy of instrument reference data (IRD) under RTS 23.

Background

The FCA uses the details of the financial instruments provided by UK trading venue operators and systematic internalisers to conduct effective market oversight.
Any potential issues coming from IRD’s affect the completeness and accuracy of transaction reports and transparency data of UK EMIR trade reports, as well as RTS 1, RTS 2, and RTS 3.

Common Rejection Messages for IRD

IRD messages come as either warning messages or rejection messages. Warning messages are not incorrect but should still be reviewed.
The table below shows the top 10 most common rejection messages and the number of rejections in 2023.

Count of rejections	Description
72,466	The legal entity identifier (LEI) provided for ‘Issuer Identifier’ is invalid.
51,232	The following records are reported twice in the same file.
37,708	The Market Identifier Code (MIC) provided for ‘Trading Venue’ is invalid.
29,852	The Maturity Date and Date of admission to trading or date of First trade are not consistent.
10,965	The following mandatory fields are not reported: ‘List of RTS 23 number Id of missing fields’.
5,421	The following non-applicable fields are wrongly reported: ‘List of RTS 23 number Id of N/A field(s)’.
2,138	The Classification of Financial Instruments (CFI) code is not valid.
989	The value provided for Notional Currency 1 is invalid.
691	Termination date is earlier than First Trade Date.
484	Expiry date is earlier than First Trade Date.

Best Practices for Invalid Issuer LEI, Invalid Instrument Classification and Cancelled IRD

Although there are situations where it is not possible to submit the accurate LEI, submitting firms should only use an alternative LEI as a last resort.
- In these instances, IRD can be submitted using their own LEI in field 5 (Issuer LEI) to ensure timeliness in their reports.
- Once the accurate LEI is available, it should be reported as soon as possible.
In some cases of CFI codes used in RTS 23 submissions, the CFI may not conform to the ISO 10962 standard and will trigger an INS-101 rejection message.
- If this occurs, the CFI reported should be amended to conform to the ISO 10962 by the submitting entity.
- The discrepancy should also be reported to the relevant National Numbering Agency (NNA) and once there is a correction, the accurate CFI code should be reported.
If an entity submits IRD to the FCA in error, they should cancel it.
- There have only been 23 IRD cancelled records in FCA FIRDS between March 2023 and February 2024, suggesting that this functionality is not being used often.
- The cancellation process should not be used to terminate reportable financial instruments.

Use of Dummy Values and Breach Notifications

Dummy or default values do not align with the relevant reporting requirements.
Trading venues and systematic internalisers are meant to notify the FCA when they identify IRD that is incomplete or inaccurate.
- Between 2018 and February 2024, there have only been 135 breach notification forms for IRD, suggesting not all issues are being notified.

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