FIN-FSA observations on transaction reporting and a new reporting example
In the context of its ongoing supervision, FIN-FSA has assessed the accuracy of reporting under the new transaction reporting requirements, added to the Regulations and guidelines 12/2013 on transaction reporting. Supervision observations by FIN-FSA are presented below. FIN-FSA has also introduced a new reporting example for reporting warehousing orders.
Reporting of aggreted orders and warehousing orders
The reporting of aggregated orders is provided for in reporting example 10 of the Transaction reporting - reporting examples document (investment firm executes a trade with several clients and the order is executed in several transactions).
FIN-FSA emphasises that reporting example 10 is only to be used in such cases where there are several clients involved in an order and the order is executed in several transactions on a marketplace. If a transaction has only one client or an order is executed in a single transaction, customer details should be reported for the transaction on a marketplace under reporting examples 1a, 1b or 1c.
The document ‘Transaction reporting: reporting examples’ has been supplemented with reporting example 16 for warehousing orders where there are several clients involved in an order. This alternative example may be applied if the reporting party is technically unable to report under the reporting examples above.
FIN-FSA urges investment service providers to ensure that reporting example 10 and the new reporting example 16 are only applied when there are several clients involved in an order and the order is executed in several transactions. FIN-FSA will monitor the use of these ways of reporting, and the reporting party must be able to provide justifications for applying these reporting examples.
The document ‘Transaction reporting: Reporting examples’ is available at FIN-FSA's website.
Reporting of transmitted orders
When an investment service provider transmits an order to be executed by another investment service provider, the transmitter must report to FIN-FSA information on the execution of the transaction and information on whose behalf it was made (client details), unless the executor of the transaction has reported this information to FIN-FSA on behalf of the transmitter.
FIN-FSA emphasises that the transmitter’s obligation to report client details to FIN-FSA also applies to transactions reported by a foreign executor to its national competent authority.
Accuracy of transaction reporting
FIN-FSA’s transaction reporting system is part of a European-wide data collection and exchange system for securities trading. The accuracy of the data reported plays a key role in the implementation of supervision.
In the context of its ongoing supervision, FIN-FSA has observed the following deficiencies and errors in the accuracy of transaction reporting:
- the transaction time of a transmitted and executed order differed from the time reported by the executor or was missing altogether
- in transactions under discretionary portfolio management, the portfolio manager’s business ID was not reported in the proxy holder field
- trades on financial instruments traded on First North Finland were not reported
- another identifier than a Finnish personal ID or business ID was reported as the identifier for a Finnish client
- the client’s personal ID or business ID was only reported in the client code field but it was missing from the client identifier local field
- the price of bond trades was reported in the price currency field instead of the price percentage field
- there were errors in the reporting of the trading reference of trades on the Helsinki Stock Exchange
- another identifier than the BIC code was used for the counterparty to a trade on an exchange
- the country code reported in the client’s address details differed from the 2-digit ISO-3166 code (eg FI)
- investment service providers had shortcomings in monitoring the feedback reports of transaction reporting or in correcting rejected transactions.
FIN-FSA urges investment service providers to ensure in their own reporting the accuracy of the abovementioned details. FIN-FSA emphasises that the reporting responsibility always falls on the party under the reporting obligation, even if the technical implementation of the reporting is outsourced.
The accuracy and coverage of transaction reporting is one of the supervisory focus areas. FIN-FSA will intervene as necessary in any observed non-compliance with reporting requirements by supervisory measures.
Market Supervisor Jyrki Kiviniemi, tel. +358 10 831 5423 or jyrki.kiviniemi(at)fiva.fi.