Here, we answer FAQs that may be helpful to all firms with a requirement to report transactions.
What else can we do to ensure we report correctly?
We encourage firms to regularly review the integrity of their transaction reports to ensure they are completing all the fields that are mandatory for the respective product types that are being transacted (in line with SUP 17 Annex 1) and we recommend they check that they are reporting all transactions reportable under SUP 17 to us. To help you review the integrity of your data we are happy to supply copies of transaction reports received so you can cross-check them against internal records. To request copies of transaction reports received please complete our online form at:
http://www.fsa.gov.uk/pages/Doing/Regulated/Returns/mtr/managing/request/index.shtml
We have started to trade a new product, what do we do?
We encourage you to ensure that before starting to trade a new product type, you fully consider the transaction reporting implications and, where required, make advance arrangements.
We may have misreported, what do we do?
You need to ensure you have the systems and controls in place, to ensure your data is accurate and to make sure we receive transaction reports on a timely basis. If you believe your firm may have misreported some transactions, inform our Transaction Monitoring Unit and your supervisor in writing as soon as you can. 38 Transaction Reporting User Pack (TRUP)
What about UK public holidays?
Under SUP 17.2.7, you must report the transaction by the close of the working day following the day on which that transaction took place, e.g. transactions entered into on the Friday before a Bank Holiday Monday will need to be reported by the end of the Tuesday.
What time is the close of the working day?
A firm will be deemed to have reported a transaction in line with SUP 17.2.7 R where that transaction report has been accepted by an approved reporting mechanism, or regulated market or MTF that reports to us by the end of that reporting channel’s working day. For further clarification, you should contact your respective ARM(s).
Are internal transactions reportable?
Transactions entered into within the same FSA-authorised entity do not need to be reported.
Are ‘grey market’ transactions reportable?
A transaction in a financial instrument admitted to trading on a regulated market, or a prescribed market, or in any OTC derivative the value of which is derived from or is otherwise dependent on an equity or debt-related financial instrument that is admitted to trading on a regulated market, or on a prescribed market undertaken in the grey market, is transaction reportable.
Is over reporting ok?
We recognise that separating out transactions that are not reportable may be costly. So we are content for firms to over report transactions.
What about COBS 16 Annex 1 R?
COBS 16 Annex 1 R states that certain information must be reported to a retail client in line with SUP 17 Annex 1R. However, in some instances the format specified by SUP 17 is not relevant to the needs of the customer. Please see the ‘our response’ section under 19.9 of Policy Statement 07/6.
We have concerns about certain rules, what should we do?
Any firm with concerns about their ability to meet any transaction reporting rule should contact their supervisor and the Transaction Monitoring Unit as soon as possible.
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Are results of option transactions reportable?
The MiFID definition of a transaction excludes the exercise of options and so these transactions are not reportable.
Are primary market transactions reportable?
The MiFID definition of a transaction excludes primary market transactions in financial instruments falling within Article 4(1)(a) and (b) of MiFID, such as issuance, subscription and allotment and so these transactions are not be reportable.
Are the individual fund allocations reportable?
As we outlined in our Policy Statement PS07/2, when a broker reports a transaction on behalf of a client of a firm providing a service of portfolio management, the report submitted by the broker should identify the firm providing the service and not the underlying client. It is therefore only necessary to report the bulk trade; the allocations for each respective client
are not reportable.
Are ‘in specie’ transfers reportable?
In specie transfers involve the direct transfer of assets into or out of a portfolio or trust. Often in specie transfers are used as a means of reducing the costs involved in the sale or purchase of assets. On this basis, we do not consider that in specie transfers should be reported, as long as they do not involve a change in beneficial ownership. In addition, there may be cases
where a technical change in beneficial ownership occurs but there is no requirement for transaction reporting. For example, in specie transfers in and out of unit-linked insurance funds of assets involve a change in beneficial ownership since the assets are owned by the insurance company and the policyholder only has contractual rights valued on the assets. Nonetheless, we would not require reporting of such transfers. If you are in any doubt as
to whether a particular transfer should be reported, please contact the Transaction Monitoring Unit.
What about when we outsource a portfolio?
If you have outsourced the management of a portfolio to another EEA MiFID investment firm providing a service of portfolio management, then it has an obligation to report to its relevant competent authority in compliance with the rules of that competent authority. If you have further queries related to outsourcing a portfolio, please contact the Transaction Monitoring Unit by email at: tmu@fsa.gov.uk, or by calling the transaction reporting helpline on: 02070666040. 40 Transaction Reporting User Pack (TRUP)
What about when our ARM has a technical problem?
Under our rules (SUP 17.2.5 R), it is the responsibility of the reporting firm to ensure the accuracy of the information contained in a transaction report. However, we recognise that there may be instances where the firm takes all reasonable efforts to report correctly via an ARM, but the ARM fails to transmit the correct information to us. In these instances, we recognise that this is not a fault of the firm.
What about mirrors of on exchange derivatives?
Instruments that mirror the specifications of on exchange equity or debt-related derivatives, but that are not admitted to trading on a regulated market, are considered to be OTC derivatives for transaction reporting purposes. Transactions in these instruments are reportable and should be identified in a transaction report in accordance with the requirements of OTC derivatives set out in SUP17 and the TRUP.
What about when we act as an introducing broker?
Where a firm acts as an introducing broker only and does not act in a principal or agency capacity, and passes a client order to another firm, who then executes the transaction and has the relationship with the underlying client, the introducing broker does not have to report the transaction to us.
