Fifth Of UK Fund Managers Make Reporting Errors to FCA

According to data obtained under an FOI request by Duff & Phelps, approximately one-fifth of all UK fund managers are guilty of making errors in their transaction reporting to the Financial Conduct Authority (FCA). 

These errors have been caused by a failure to meet the highly complex and detailed transaction reporting requirements enforced by MiFID II. 

In January 2018, MiFID II was implemented in an attempt to improve the transparency of European markets by forcing investment managers to provide reports of all transactions. As a result of this, most firms have had to use third-party reporting systems – such as eflow’s transaction reporting solution – to meet the demands put forward in MiFID II.

These demands, however, have proved difficult to meet. According to the data collected by Duff & Phelps, at least 546 firms have admitted to making errors in their transaction reporting since MiFID II came into effect. These amounts to roughly 15% of the 3,274 investment firms currently operating in the UK. 

A fifth of UK fund managers make reporting errors under Mifid II rules https://t.co/rDQAhUaYsp

— Financial Times (@FT) December 6, 2019

In addition to these offending firms, the FCA has contacted 223 more firms regarding potential issues with their reporting data. This means that approximately 20% of all UK fund managers have discussed erroneous reporting with the FCA.

Nick Bayley, a former FCA regulator, has claimed that we are still currently in a ‘honeymoon period of education and encouragement in relation to transaction reporting’.

Both ESMA and National Competent Authorities (NCAs) across Europe have been somewhat lenient with low-quality reporting since MiFID II’s implementation. However, regulatory bodies are becoming increasingly strict as this ‘honeymoon period’ draws to a close.