FCA FIRDS and transaction reporting

The UK left the EU on 31 January 2020 with a Withdrawal Agreement and entered a transition period which is due to operate until 31 December 2020. We expect firms, trading venues and ARMs to make reasonable steps to comply with their requirements under the Transaction Reporting Regime and any requirements they have to submit instrument reference data by the end of the transition period.

The Treasury has given UK financial regulators the power to make transitional provisions to financial services legislation for a temporary period. This is known as the Temporary Transitional Power (TTP).
We are applying the TTP on a broad basis. However, there are some areas where we are not applying the TTP, including to key requirements for MiFID II transaction reporting. Firms are therefore now expected to comply with these key requirements.

Update: 31 January 2020

The UK has left the EU. It has entered a transition period which is due to operate until 31 December 2020.

During this time EU law will continue to apply. Firms and funds will continue to benefit from passporting between the UK and EEA. Consumer rights and protections derived from EU law will also remain in place.

All Markets in Financial Instruments Directive (MiFID) systems will remain connected to ESMA during the transition period. Our new Financial Instruments Reference Data System (FCA FIRDS) will continue to publish in parallel to ESMA’s systems, but should only be used by firms for testing purposes. The FCA’s version of ESMA’s Financial Instruments Transparency Reference System (FCA FITRS) will re-open for industry testing on 5 October 2020.

Our expectations of firms

The information on this page sets out what firms need to do to be ready for the changes that will take place when the transition period ends and should be read together with our statement Brexit – what we expect firms and other regulated persons to do now

It gives a high-level overview of what firms need to do now to be compliant with the onshored MiFID regime for transaction reporting when the transition period ends. It also provides more details about our internal project timetables (including IT build) and the industry testing schedule. Check our Brexit pages, which will be updated with new information as it becomes available.

Replacing the ESMA FIRDS system for the UK

FCA FIRDS has been built to replace ESMA FIRDS in the UK.

ESMA’s FIRDS system records all those instruments reported by EU trading venues as being traded on them (TOTV) and helps firms, amongst other things, determine their reporting obligations.

The FCA replacement for this system, FCA FIRDS, went live in March 2019 and remains operational. Firms will continue to be able to use the FCA FIRDS publishing system for testing purposes until December 2020. This system enables firms to download full and delta reference files. 

Read FCA FIRDS: Instructions on access and download of full and delta reference files (PDF).

How FCA FIRDS will work

In order to help firms we are making our system as similar as possible to ESMA’s. The schema for the 2 systems will be identical on day 1. However, some fields within the system will work differently. The most important of these are:

  • Relevant Competent Authority (RCA) – will no longer be meaningful. The RCA field for instrument reference data submitted to us will default to GB.
  • FCA FIRDS Master Data (the record of the most relevant market) is likely to be different from ESMA’s, given that ESMA will use master data from EU venues.

The functionality of the search engine is comparable to ESMA’s, but we will be using a different search engine, Amazon’s Elastic Search.

We have considered suggestions made by firms to improve the ESMA FIRDS system by changing some fields or the reporting logic. In most cases the benefit of introducing these changes is outweighed by the uncertainty it would cause, given short timeframes. However, we will give firms more certainty around the timing of issuing delta files and full files. This will improve firms’ experience of the system without deviating from ESMA’s approach.

Mechanics of the switch-over and timing

We will give more information about the switchover from ESMA FIRDS to FCA FIRDS in due course and these will be published on our Brexit pages.

Transaction reporting

RTS 22 contains the main changes to firms’ reporting obligations under the transaction reporting regime that arise because of Brexit. For example, UK trading venues will have to report transactions carried out on their venue by EEA members except for UK branches of EEA firms; EEA firms with a UK branch operating under the temporary permissions regime will have to report relevant transactions to us under the transaction reporting regime.

We expect that firms used to transaction reporting in the UK will see very little change to the underlying mechanics of reporting or the reporting logic, which is key to achieving as smooth a transition as possible.

What firms need to do

The three main categories of firms that will need to take action to prepare for the end of the transition period are:

  • All firms who want to access FCA FIRDS to support their transaction reporting obligations will need to utilise (either directly or via a third party) to FCA FIRDS publication tool.
  • UK trading venues will need to prepare to transaction report for transactions on their venues by their EEA members who are not operating through a UK branch and who report to their home state within the EEA and will become third-country firms as regards the UK after the UK exits the transition period.
  • EEA firms who operate through a UK branch, and who enter the temporary permissions regime, will need to begin preparations to either connect directly to the MDP or use an Approved Reporting Mechanism (ARM) to be able to transaction report to the FCA by the end of the transition period. Some firms may need to change their ARM, if their current ARM is not planning to make use of the temporary authorisation regime for EEA Data Reporting Service Providers (DRSPs) or is not connected to the FCA’s Market Data Processor by the end of the transition period. A list of all ARMs authorised by us can be found on our DRSP webpage. We will update this list for EEA DRSPs that have notified us of their intention to use the temporary authorisation regime and that have onboarded to the MDP system. However, if a firm is unsure whether its ARM intends to operate in the UK after the UK exits the transition period it can also contact its ARM directly, as the ARM may be in a better position to give their clients timely information about their intentions. We would remind firms that connecting to an ARM, or directly to the MDP, can take several weeks so if firms are looking to make a change to comply with their UK reporting obligations they should make contact in good time.

Firms are best placed to understand their own needs and requirements. The above list is not exhaustive of the circumstances in which actions will be needed. Each firm will need to consider whether, in the light of their own specific business model, there are actions they need to take.

Page updates

07/01/2021: Editorial amendment Note about TTP key requirements
15/12/2020: Link changed FCA Financial Instruments Reference Data System (FIRDS) instructions
01/10/2020: Information added Update in highlight box on key requirements for firms