Market Watch 59
April 1, 2019
Completeness and accuracy testing
- FCA have reminded firms of their requirement for completeness and accuracy testing for transaction reporting.
FCA have stated;
- firms have a “requirement to conduct regular reconciliation of front office trading records against data samples provided by competent authorities.”
- “the number of data extract requests we receive suggests some market participants may not be aware of this, or may not be conducting regular or sufficiently thorough reconciliation”
- “Firms should not assume that a report was accurate because it was accepted by the Market Data Processor, as business validation rules are not intended to identify all errors and omissions”
Data quality issues
- FCA have summarised a variety of data quality issues they are seeing – and they have stated they expect Firms should have processes in place to monitor for these issues;
- “we expect firms to have arrangements in place to report details accurately, and to notify the FCA where inaccurate information is identified.”
Ref Field Issue FCA comment CN test? 1 Trading date time (Field 28) UTC Reporting (BST) We continue to see errors in transaction reports when UK
clocks transition to and from British Summer Time
Y 2 Trading date time (Field 28) UTC Reporting (clock synchronisation) Errors driven by inaccurate clock synchronisation Impact analysis required 3 Price (Field 33) Should be major currency (eg pounds) We have identified multiple instances of firms misreporting in the minor currency (eg pence) Under development 4 Price (Field 33) NOAP or 0 We have also noted firms reporting a price of zero or ‘NOAP’ in circumstances not permitted by the applicable guidelines Y 5 Venue (Field 36) Segment MIC should be used The operating MIC should only be used when a
segment MIC is unavailable. The FCA made improvements to validation rule 220 in November 2018 to enforce
this requirement. We expect firms to cancel, correct and resubmit all transaction reports affected by this issue.
Y 6 Buyer (7) / Seller (16) Misreporting of buyer as seller It is critical that firms have arrangements in place to report party identifiers accurately. Impact analysis required 7 Buyer (7) / Seller (16) Use of LEI These should include controls to ensure transactions are not entered into prior to a client obtaining an LEI (where the client is eligible for such an identifier). Impact analysis required 8 Party Identifiers Dummy national identifiers for natural persons. In some cases, generic ‘dummy’ identifiers have been used (eg GBXX999999X). Under development 9 Party Identifiers Reuse of national identifiers for multiple natural persons. Other firms appear to have reused identifiers for multiple clients Under development 10 Party Identifiers Inaccurate national identifiers for natural persons. Some market participants have reported identifiers that are not in the list of identifiers in RTS 22 Annex II (eg a passport number, where the passport number is not one of the allowable identifiers for the country of the nationality of the individual). Y 11 Party Identifiers Not using 1st priority id for natural persons Other firms have not used the first priority identifier where available (eg using concatenated codes for British nationals with a national insurance number). Y 12 Buyer (7) / Seller (16) / Capacity (29) Buyer/seller for AOTC We have further recorded firms populating buyer and seller fields inconsistently with the trading capacity field. For example, firms reporting themselves as the buyer or
seller where the trading capacity is AOTC.
Y 13 Executing Entity (4) Broker as executing entity Some market participants have incorrectly populated the LEI of the broker they are forwarding an order to in the executing entity field. They should have populated this
field with their own identifier.
Y 14 Instrument ID (41)/ Underlying Instrument ID (47) instrument is not valid on the trade date – reportability Before contacting the FCA about these errors identify whether the instrument (or its underlying) is reportable Y 15 Instrument ID (41)/ Underlying Instrument ID (47) instrument is not valid on the trade date – incorrect MIC Before contacting the FCA about these errors ensure the MIC code of the trading venue is accurate Y 16 Instrument ID (41)/ Underlying Instrument ID (47) instrument is not valid on the trade date – incorrect underlying instrument id Before contacting the FCA about these errors confirm the underlying instrument is populated in the correct part of RTS 22. Such errors frequently occur due to inaccurate population of the underlying instrument in the individual or index element of the XML schema. Y
Errors and Omissions
- “Where errors or omissions are identified in transaction reports, the ARM, investment firm or trading venue reporting the transaction must correct the information and submit a corrected report to the competent authority”
- “Market participants must promptly notify the relevant competent authority where they become aware of errors or omissions within a transaction report.”