Investment Operations

ACA: 97% of Firms are Reporting Incorrectly Under MiFIR/EMIR

Financial Compliance
  • 97% of reports under MIFIR/EMIR contain inaccuracies
  • On average each report has 30 separate error types
  • Despite this, 87% of firms are confident in the quality of their reports
  • On the anniversary of EMIR REFIT, data quality is still poor 

New research from governance, risk, and compliance (GRC) advisor ACA Group into the accuracy of transaction reporting under MIFIR/EMIR has shown that 97% of firms reviewed are currently reporting incorrectly. 

The research shows that most firms (87%) are confident in the quality of the reports that they submit to regulators via Approved Reporting Mechanisms and Trade Repositories under MiFIR and/or EMIR, with many assuming that no direct contact from the FCA means that all must be well.

However, analysis of the data shows that firms’ reports featured, on average, over 30 separate error types, suggesting that this is not just a case of a single mistake affecting all reports, but rather a potential indication of widespread misunderstanding of how certain reporting requirements apply to firms and their activities, particularly when arrangements and activities change. 

Matt Chapman, Managing Director and Co-Lead of ACA’s Regulatory Reporting Monitoring & Assurance Service, said that there is clearly a gap between perception and reality when it comes to transaction reporting. “Nearly 87% of respondents in our recent survey said they were confident their transaction reporting is 100% accurate and timely. Yet, our analysis shows that it is highly likely the reports in question would have contained errors,” he said. 

Chapman explained that getting trade and transaction reporting right is going to continue to grow in importance over the next 24 months. “Regulators have repeatedly described complete and accurate reporting as a common good as well as their growing frustrations that firms aren’t getting it right. As a result, they are making no bones about the fact that they expect prompt and significant improvement,” Chapman said.

Transaction reporting plays a fundamental role in market abuse surveillance and regulatory attention on data quality and timeliness is expected to increase in 2021 and beyond. The data show that, even 12 months on from the EMIR REFIT, data quality is still poor as firms struggle to implement best practice, fully identify how reporting fields need to be populated differently to reflect different trading scenarios, identify and correct errors and collaborate effectively with third parties delivering their reporting. 

“Although lack of public enforcement action in relation to MiFIR and EMIR reporting may have lulled some firms into a false sense of security, they must be prepared for this to change in the months ahead, or face the consequences,” Chapman warned.