Should the UK leave the EU without a transition period, the FCA expects firms, trading venues and ARMs (Approved Reporting Mechanisms) to take reasonable steps to comply with their requirements under the Transaction Reporting Regime by exit day and any requirements they have to submit instrument reference data.
The FCA is replacing the European Securities and Markets Authority’s (“ESMA”) Financial Instruments Reference Data System (“FIRDS”) with its own “FCA FIRDS”.
ESMA’s FIRDS records all those instruments reported by EU trading venues as being traded on them and helps firms, amongst other things, determine their reporting obligations.
The FCA will start feeding its new FCA FIRDS with live production data from early March to ensure that it has a full database of instruments by 29 March 2019. The FCA also intends to publish an extract of ESMA data in FCA FIRDS, given that the scope of the UK transaction reporting regime includes instruments traded on venues in the EU27, regardless of whether they are also traded on UK venues.
Firms will be able to test the new FCA FIRDS from 21 February 2019.
What firms need to do:
The three main categories of firms that will need to take action to prepare for the 29 March 2019 are:
- All firms who want to access FCA FIRDS to support their transaction reporting obligations will need to connect (either directly or via a third party) to FCA FIRDS publication tool. The timetable for industry testing is outlined above.
- UK trading venues will need to prepare to transaction report for transactions on their venues by their EEA members (who are not operating through a UK branch), who report to their home state within the EEA and who will become 3rd country firms as regards the UK after 29 March 2019.
- EEA firms who operate through a UK branch, and who enter the temporary permissions regime, will need to begin preparations to either connect directly to the FCA’s Market Data Processor or use an Approved Reporting Mechanism (“ARM”) to be able to transaction report to the FCA by 29 March 2019. Some firms may need to change their ARM, if their current ARM is not planning to make use of the temporary authorisation regime for EEA Data Reporting Service Providers (DRSPs) or is not connected to the FCA’s Market Data Processor by 29 March 2019. A list of all ARMs authorised by the FCA can be found on the FCA’s DRSP webpage. The FCA will update this list for EEA DRSPs that have notified it of their intention to use the temporary authorisation regime and that have onboarded to the MDP system. However, if a firm is unsure whether its ARM intends to operate in the UK after the 29 March 2019 it can also contact its ARM directly, as the ARM may be in a better position to give their clients timely information about their intentions. The FCA is reminding firms that connecting to an ARM can take several weeks so if firms are looking to make a change to comply with their UK reporting obligations, they should make contact with ARMs in good time.
The FCA has said it expects that firms used to transaction reporting in the UK will see very little change to the underlying mechanics of reporting or the reporting logic.