Client Success Stories

Don’t just take our word for it, hear how our clients solved their problems with AQMetrics

Success Stories

Join the AQMetrics team

At AQMetrics, we're constantly seeking exceptional talent to join our team.


Latest News and Regulatory Insights

Expertly crafted resources from AQMetrics for our partners and customers


FCA Issues Observations on Transaction Reporting


On 3 October 2022, the Financial Conduct Authority (FCA) issued Market Watch 70. In this publication, the FCA sets out recent observations related to transaction reporting data quality and reconciliation requirements. This communication is of interest to investment firms, credit institutions, trading venues, systematic internalisers, and approved reporting mechanisms (ARM).



The FCA reminds firms that under Article 15(3) of RTS 22, “Investment firms shall have arrangements in place to ensure that their transaction reports are complete and accurate. Those arrangements shall include testing of their reporting process and regular reconciliation of their front-office trading records against data samples provided to them by the competent authority to that effect.”Furthermore, Article 15(4) of RTS 22 goes on to state that “Where the competent authority does not provide data samples, investment firms shall reconcile their front-office trading records against the information contained in the transaction reports that they have submitted to the competent authority, or in the transaction reports that ARMs or trading venues have submitted on their behalf. The reconciliation shall include checking the timeliness of the report, the accuracy and completeness of the individual data fields and their compliance with the standards and formats specified in Table 2 of Annex I.”As an ARM, authorised by the FCA, AQMetrics notes that the number of firms requesting samples from the FCA’s Market Data Processor (MDP) for the purposes of reconciliation remains relatively low (c. 25% of total UK MiFID II firms). It is likely that many firms are performing this reconciliation through samples provided by their ARM. However, as outlined in Article 15(4) of RTS 22, if an NCA provides the firm with the ability to request and download data extracts directly from the NCA portal (as the FCA does with the MDP), then the firm should avail of these extracts to perform sample-based reconciliations, in addition to the reconciliation performed against the ARM


Data Quality

The FCA outlines a number of data quality issues that may in effect be silent to the standard validation rules and that, as a result, require reporting firms to apply internal knowledge and business judgment to detect these errors.


Use of Identifiers

We would recommend that all firms perform regular, and at least annual, reviews of the identifiers used for clients, counterparties, decision makers and traders, particularly when identifying natural persons. This annual review should check that the appropriate identifier used is based on the nationality of the natural person and that the correct ISO 3166 2-character country code is included. This regular audit should be documented in a standard operating procedure and performed by parties independent of the transaction reporting process. In addition, it is recommended that any natural person identifiers no longer in use are removed from static data stores when no longer required for processing.


Principal firms

An appointed representative (AR) or tied agent carries on regulated activity under the responsibility of an authorised firm – the principal. Where an AR is executing transactions for orders received from the principal firm, it is the principal firm that must be reported as the executing entity in the transaction reports. The principal firm is responsible for ensuring that their transaction reports are complete and accurate and we would recommend that all firms, and more specifically those with ARs or tied agents, have systems and controls in place to include regular reconciliations of reports submitted by their ARs and tied agents to ensure they are accurate and complete.


Branch reporting

The determination of when a firm is executing a transaction can be complex, particularly for UK branches of third-country investment firms.Article 3 of RTS 22 should not be considered in isolation when determining the UK branch’s reporting obligations. We would recommend that UK branches of third-country investment firms perform a review of Article 3 of TRS 22 alongside the location of the branch that received the order, the location of the branch that oversees the investment and execution decision makers, and the location of the branch whose membership was used for transactions executed on a trading venue, to ensure they are reporting accurately.


Other transaction reporting issues

It has been noted in multiple NCA circulars, and again in Market Watch 70 from the FCA that the use of the ‘INTC’ reporting convention can be applied incorrectly. It is our recommendation that clients perform regular checks to ensure both the client side and market side of a transaction are reported, to ensure that ‘INTC’ remains flat at the end of a business day and to ensure that ‘INTC’ is not used for one client performing multiple fills. This analysis can be checked by exporting data and running some basic queries against the data. Any firm’s reporting through an ARM should have the ability to extract reported data for ‘INTC’ transaction reports and run these queries in-house.It was interesting to note that the FCA included the issue that some firms continue to report a market identifier code (MIC) when they transmit an order to an executing broker. Recently ESMA extended the validation rules to catch this particular error, with rule number 283 being added – “If field 25 Transmission of order indicator is ‘true’, the trading venue field should be XOFF or XXXX.” Whilst the FCA has not adopted this latest rule, it is a simple check that can be applied by all firms as part of their reporting process.


How to avoid common errors in transaction reporting.

AQMetrics will be releasing a publication on how to avoid common errors in transaction reporting. We are also running an in-person transaction reporting workshop on the 23rd of November, in collaboration with Kaizen Reporting, to gather pragmatic suggestions on how to implement the controls, testing and audit processes to avoid making common errors. A guest speaker from the FCA will take part in a Q&A at the end of the session. Sign up for the workshop here.


If you would like to be notified of the release of the whitepaper, please register your interest below: