FCA Market Watch 78
Update
In Market Watch 78, the FCA has put forward its recent supervisory observations regarding the reporting of instrument reference data (IRD) under RTS 23. This will likely be of interest to Recognised Investment Exchanges (RIEs), Multilateral Trading Facilities (MTFs), Organised Trading Facilities (OTFs), and Systematic internalisers (SIs), as well as being of interest to investment firms and credit institutions.
UK trading venue operators and systematic internalisers are required to provide the FCA with details of the financial instruments traded on their platforms, and the FCA uses this information to gain oversight on the market. The information provided in RTS 23 is used to validate and supplement transaction data and reports and allows the FCA to better understand the products being traded.
The FCA has provided guidance around the most common IRD rejections and warnings related to incomplete or inaccurate data:
- Invalid issuer LEI – Firms are required to ensure they are submitting accurate issuer legal entity identifiers (LEIs). The FCA understands there are times when the accurate issuer LEI is not available (where the issuer does not hold an LEI or the issuer LEI has become invalid for example), and on these occasions firms can submit IRD using their own LEI in Field 5.
- Invalid instrument classification – Previously the FCA has advised that Classification of Financial Instruments (CFI) codes issued by the relevant National Numbering Agency (NNA) should be used in RTS 23 submissions, however, it is the case that in some instances the CFI issued may not confirm to the ISO 10962 standard. On these occasions, firms can amend the CFI to confirm to ISO 10962 standards. However, the firms need to report the discrepancy to the relevant NNA and update submissions once the NNA has corrected the situation.
- Cancelled instrument reference data – The FCA has advised that if an entity submits IRD in error, it should cancel this. The FCA expects all entities to have processes to cancel records when required, however advises that the process should not be used to terminate reportable financial instruments.
- Use of dummy values – The FCA has stated that it has seen dummy or default values used in IRD submissions for instrument classifications, names of the index/benchmark of a floating rate bond, and identifiers of the index/benchmark of a floating rate bond. Firms must have processes to ensure submissions are accurate, and if they are unable to obtain relevant data, they should contact the FCA as soon as possible.
- Breach notifications – The FCA has also advised that trading venues and systematic internalisers are required to notify the FCA promptly when they identify incomplete or inaccurate IRD. The FCA feels, based on the breach notifications it is receiving, that some firms are not correctly notifying the FCA when breaches occur.
If your firm has experienced any of these rejections or warnings when submitting your RTS 23 data or generally needs further support with reporting requirements, Thistle has in-house experts who can assist your firm.
Link: https://www.fca.org.uk/publications/newsletters/market-watch-78