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MiFIR, EMIR & SFTR: The ongoing impact of Brexit

Written by Mark Thornborrow

MiFIR, EMIR & SFTR: The ongoing impact of Brexit

MiFIR significantly increased the reporting obligation, encompassing 65 fields of reportable data in one binding legislative act, a significant increase from the 24 equity and debt-related instruments under the comparatively less binding MiFID ‘goals’, for which many of the fields were changed.

The complexity of FCA transaction reporting can’t be underestimated, and MiFIR-quality reporting is now a regulatory expectation. Nor can the consequences of non-compliance be downplayed. In the UK, the FCA fined Goldman Sachs International (GSI) more than £30m (which would have been closer to £50m were it not for early settlement) for failing to provide timely and accurate reporting between 2007 and 2017.

The time period predates MiFIR, but it is another sure sign among many that regulators can and will impose significant financial penalties for non-compliance in any areas critical to the detection of market manipulation. FCA transaction reporting, as with all transaction reporting across key global markets, remains a key regulatory concern.

This piece will focus on the impact of Brexit on a firm’s obligations relating not just to MiFIR but also EMIR and SFTR, two legislative diktats focused on the identification of systemic risk within financial markets, but no less of a regulatory priority.

Brexit’s continued regulatory relevance

Given the UK was a member of both the EU and the EEA on 3rd January 2018 when the current regulation on FCA transaction reporting came into effect, the advent of Brexit has introduced further divergence in regulatory reporting frameworks.

We’re now significantly past the transition period and the relative stability afforded by the Temporary Equivalence Arrangements into a landscape with no passporting, with dual reporting, and difficulties both with trading on EU venues and sharing data.

With that said, the UK recognises the centrality of the financial sector to its own economic fortunes and has mirrored as best it can the reporting requirements, with fields and formats designed to be consistent with that of the EU.

There is an obvious inseparability between regulatory obligations and political dynamics. While there remains any tension over the UK’s non-membership of the EU, the risk is that UK firms operate under a threat – large or small – of having their access to EU venues restricted and friction in the sharing of data and other sensitive regulatory aspects.

Green shoots of cooperation?

The regulatory landscape continues to evolve post-Brexit, and both the UK and EU will make further changes to their respective reporting requirements. Firms have had to closely monitor these developments and adapt their reporting processes accordingly.

At the end of June 2023, The EU and the UK signed their memorandum of understanding on regulatory cooperation. Long delayed, largely due to tensions in other Brexit battlegrounds, it is a positive step, but with the two areas fundamentally in competition with each other, it is unlikely to reap much by way of commercial sympathy and concession for either side by the other.

There are some areas in which a more efficient relationship can be expected, however, regulatory divergence remains, in our view, the most likely outcome. This will come in the form of a drift over time, placing pressure on legacy systems and internal compliance operations, especially where there remains an overreliance on manual processes or inflexible technology.

April 2024 UK regulatory changes

The drift referenced above won’t always be negative for both sides of the Brexit divide.

In April 2024, a raft of changes will be rolled out in the UK, supporting global competition for UK firms and best execution for investors. Pre-trade, reference prices from overseas venues will be able to be used, and post-trade processes will be streamlined.

Any firms registered with the FCA as Systematic Internalisers (SI) will benefit from the separation of the granting of SI status from OTC reporting requirements.

The inherent point here is that, whilst the post-Brexit decoupling of regulatory policy may well support firms in a commercial sense – these measures are pro-competitiveness for UK firms at least – they represent another set of variables for compliance teams when it comes to FCA transaction reporting and, indeed, to global regulators.


EMIR demands that all UK or EU-established participants (those who enter into, modify, or terminate a transaction) in derivative contract trading must submit comprehensive trade details. These reports are submitted to Trade Repositories, which aggregate the information and share it with regulator bodies. Regulators then utilise this data to assess inherent systemic risks.

Derivatives transaction reporting hasn’t escaped the impact of Brexit, although the relative lack of breadth of EMIR in terms of the instruments covered does partially mitigate this impact.

Following the end of the Brexit transition period, UK-based entities faced added complexity in terms of EMIR reporting. EEA counterparties must report to EEA trade repositories, with UK entities must report under UK EMIR to an FCA-registered trade repository to cover their FCA transaction reporting responsibilities.

Branches of UK firms in the EU must report under UK EMIR, while UK-managed EEA Alternative Investment Funds (AIFs) face a double reporting requirement.

Transactions have to be reported separately under MiFIR and EMIR as the two sets of legislation exist for different reasons. Should an OTC derivative have a venue-traded underlying, this would generally fall under both EMIR and MiFIR. This is in itself not a Brexit impact but we again return to divergence. Any divergence in the reportable data effectively creates the requirement for four reports of differing content for certain transactions.


There are some similarities between SFTR and EMIR related to the ultimate objective of the legislation, that is to monitor transparency and, thus, risk within markets. However, the data requirements are quite different between SFTR and both EMIR and MiFIR, differing in terms of scope, asset classes and content of the data.

SFTR, which focuses on securities financing transactions, necessitates data that is tailored to these types of transactions, encompassing a range of asset classes and specific content requirements. This unique data landscape makes the impact of Brexit on SFTR particularly complex, requiring financial firms to adapt their reporting systems, data models, and processes to meet the specific data demands of both the EU SFTR framework (for transactions involving EU entities) and the UK SFTR framework (for transactions involving UK entities) while ensuring data accuracy and continuity. This underscores the nuanced challenges posed by Brexit.

Bringing efficiency & simplicity to transaction reporting

Regardless of geopolitical interference, transaction reporting brings with it diverse reporting requirements and the need for complex data enrichment and validation, which, when handled manually, are time-consuming and error-prone.

Regulatory updates, of course, further intensify the operational burden.

There are myriad operational challenges faced by financial institutions as they comply with complex regulations such as MiFIR, EMIR, and SFTR. This was, in reality, the case pre-Brexit, given the overreliance on legacy systems and manual processing, but for firms subject to FCA transaction reporting and their EU counterparts, Brexit has added a layer of complexity to an already convoluted area which is a frictional drag on top and bottom lines.

Financial institutions also grapple with managing multiple reporting obligations simultaneously, including those involving cross-border operations post-Brexit.

Legacy systems often struggle to adapt to evolving regulatory demands and limited internal resources while maintaining a comprehensive audit trail, back-testing historical data, and ensuring data accuracy are resource-intensive tasks.

TZTR offers a comprehensive transaction reporting solution that simplifies and streamlines compliance with key regulations, including MiFIR and EMIR encompassing the entire reporting lifecycle within a single system and with seamless connectivity to all major European regulatory entities.

TZTR offers backtesting of client trade data to ensure retrospective compliance and provides continuity of historical reporting data, establishing a reliable audit trail. From data upload to final submission, TZTR’s intuitive workflow enhances compliance while minimising disruption to your reporting procedures. It’s a robust solution for financial institutions seeking efficient, accurate, and hassle-free regulatory reporting under MiFIR, EMIR, and SFTR, be that FCA transaction reporting or to a host of overseas NCAs.

Key features include automatic report submissions, meticulous data enrichment, validation, and 3-way reconciliation, ensuring data accuracy and compliance. TZTR also offers field-by-field editing and the ability to ingest response files from National Competent Authorities (NCAs), Approved Reporting Mechanisms (ARMs), and Trade Repositories (TRs).

Geopolitics and international competitiveness are more than ever an existential reality within EU and UK financial markets, and these two forces alone will be enough to see a divergence in underlying regulations as regulators come under pressure from market participants to create competitive advantages for them and as regulators themselves prioritise and deprioritise territory-specific areas of risk. Brexit has thrown a highly competitive fox into the henhouse of regulation.

The case for the delegation of global NCA and FCA transaction reporting responsibilities to a fluid, intuitive, and continually-updated system continues to grow stronger.