LSE teams with Kaizen for MiFID trade data testing

Transaction reports filed to regulators for surveillance can be tested for incorrect data

The London Stock Exchange Group (LSEG) has struck a deal with Kaizen Reporting, a firm offering regulatory compliance products, to deliver Kaizen’s ReportShield quality assurance service through UnaVista, the exchange’s global platform for matching, validation and reconciliation services.

In particular, the LSEG said, ReportShield will test the transaction reports firms have to deliver to their market regulators under the European Union’s MiFID at the field level to ensure that data is correct and regulatory compliant.

The UK’s Financial Conduct Authority (FCA) has identified 180 million financial transactions reported to it since 2009 with valid but incorrect data. But the real number could be far higher because the reported total is based on those firms that were caught and fined.

The FCA obliges financial firms to produce transaction reports  first and foremost to aid the detection and investigation of suspected market abuse, including insider trading and market manipulation. The FCA uses Zen, its market monitoring and surveillance system to identify suspicious transactions using automated alerting algorithms.

However, states the FCA website: “The efficiency of both of these functions can be compromised by inaccurate transaction reporting and poor data quality.” The FCA has also said that weakness in internal systems and controls at firms that have been is one of the main reasons that the contravened MiFID reporting rules.

The LSEG said that clients using the UnaVista platform will be able to use the ReportShield service to test their data to make sure that it is correct, reducing the number of reporting irregularities. And Mark Husler, UnaVista’s CEO said that the ReportShield service can provide compliance assurance not only for MiFID, but also EMIR and upcoming MiFIR regulation.

Additional information: Read the FCA’s Transaction Reporting User Pack (TRUP) 3.1 here

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