The UK’s financial watchdog, the Financial Conduct Authority (FCA), has set out plans to streamline transaction reporting requirements in a move that will save companies over £100 million per year, according to its announcement.

FCA Removed Several Transaction Reporting Requirements

In a press release published on November 21, the regulator said that it receives over 7 billion MiFID transaction reports a year, which are used to support the cleanliness, transparency, and resilience of UK markets.

However, the agency believes it can reduce costs for firms, support growth, and improve the quality of data received in three steps. The first one is the removal of foreign exchange derivatives from reporting requirements, which will reduce costs for over 400 companies.

Next, it will remove reporting requirements for 6 million financial instruments, including equities, bonds, and certain derivatives that are only traded on EU trading venues. Lastly, it will reduce the period for correcting historic reporting errors from 5 to 3 years, thus lowering the number of transaction reports that need to be resubmitted by a third.

According to the regulator, the move should reduce the current cost of dealing with over seven billion MiFID transaction reports a year from nearly £500 million to £400 million.

Therese Chambers, the joint executive director of enforcement and market oversight, commented on the move, stating that transaction reports are essential and they help the FCA detect financial crime and monitor the resilience of the UK markets. However, she said that the FCA can be smarter about it, and by clarifying and streamlining requirements, it expects to receive more accurate and complete reports.

‘Reducing costs while improving the quality of the data we receive is a no-brainer. It means we can support growth and receive better market intelligence to act on,’ Chambers explained.

Some Industry Players Want The FCA To Go A Step Further

However, the plan does not go as far as some industry players wanted. Hedge funds, for example, had called for the removal of all reporting requirements for buy-side investors, seeking to mirror the situation in the US and Japan.

However, the FCA rejected this suggestion, explaining that the UK market has an “international nature,” meaning that more than half of all transactions are carried out by buy-side firms.

The Alternative Investment Management Association’s Adam Jacobs-Green said that the UK fund managers are disappointed by not being removed from the transaction-reporting rules entirely.

Meanwhile, Rollo Burgess, partner at Capco, welcomed the reforms, adding that a thoughtful simplification of obligations of reporting requirements should not increase operational risk, but noting that there is potential risk in divergence between the UK and other jurisdictions.