The Financial Conduct Authority will begin data quality checks on MiFID II transaction reports even though it has experienced some systems glitches. Connectivity issues suffered by its Market Data Processor (MDP), which ingests transaction reports submitted by approved reporting mechanisms, are being resolved.
There was also a problem related to mismatches between International Securities Identification Numbers (ISINs) used by firms and those in the Financial Instrument Reference Data System (FIRDS) which caused a large backlog of transaction reports sitting in pending queues.
The FCA has signalled investment firms and their advisors that the MDP is in a much stronger position now and shortly it will begin to analyse the content of the reports submitted. Its already let investment firms know informally where it sees some basic errors. Some firms, for example, are misreporting prices and volumes.
Fixing problems early will help firms manage regulatory risk as well as the overall cost of reporting, perhaps even bringing it down. Firms have started to connect to the MDP to access data extracts, allowing them to do accuracy reviews, testing and power their quality control functions. Market participants report there were issues with connectivity just after go-live when firms wanted to get extracts quickly but were unable to do so. It’s only in the last few weeks that they’ve been able to get extracts from the MDP system to allow them to do their monitoring.
To request data extracts, firms need first to submit a form to gain access to the MDP Entity Portal. If the FCA is satisfied with the information provided, access will be granted. This process is explained on the FCA website. Once firms have access to the MDP Entity Portal, they should be able to submit the requests for data, the spokeswoman said in an emailed statement.
A big issue that users of the MDP data portal have raised with the FCA is that it does not give access to submission timestamps. That omission, experts have said, makes a lot of the data useless, because firms using the data cannot know if there have been multiple versions of the same record or what the latest version is. The FCA is looking into whether it will offer these timestamps.