FSA Consults on Transaction Reporting User Pack Version 3
The Financial Services Authority has proposed guidance that relates to the SUP17 of the FSA Handbook (Transaction Reporting).
This guidance is likely to be of most relevance to authorized firms with transaction reporting obligations.
The TRUP provides guidance to firms on understanding the transaction reporting obligations that come from Directive 2004/39/EC on MiFID, implemented through SUP17 of the FSA Handbook. The current version of the TRUP (Version 2) was published in September 2009.
Version 3 aims to update the document to remove historical information that is no longer relevant; update references and incorporate guidelines published by the Committee of European Securities Regulators (CESR); incorporate guidance published elsewhere and guidance issued since the publication of Version 2; and provide clarification on areas raised by firms and trade bodies and where it is helpful in assisting the FSA to conduct its market abuse monitoring.
Publication of Version 3 sought to add new guidance where necessary to assist the FSA to conduct its market abuse monitoring; incorporate the relevant parts of the ‘Guidelines on reporting of On-Exchange derivatives (Aii and ISIN derivatives)’ document previously published separately in September 2009; reorganise the structure to present information in a more logical order, remove duplication and references to issues in several places; tighten up some of the language to remove ambiguity; move material previously located in the FAQs section to the main body of the text where appropriate; add clarification to some of the text and examples where we believe this is helpful or where clarification has been requested by firms or trade associations; remove some historical references that are no longer relevant.
It also aims to incorporate some of the guidance (previously consulted) published in Market Watch or to be published in Market Watch since the publication of Version 2 of the TRUP, including reporting transactions in derivatives conducted through clearing platforms of derivative markets (ISIN and Aii); reporting transactions in derivatives conducted through clearing platforms of derivative markets where the reference data is not available; Turquoise Derivatives operating as an MTF – consequences for transaction reporting; and incorporate some changes to bring into line with CESR guidelines.
Most of the guidance in Version 3 of TRUP has already been published either in the previous Version of the TRUP or in Market Watch and/or SUP17, and does not constitute a change to how we expect firms to report.
The main areas of new/amended guidance are agency transactions required to be reported in a single transaction report (without using the internal account), branch reporting, guidance on reporting of total return swaps.
Existing guidance indicates that reporting as CFDs was being considered but the proposed guidance advises they should be reported as swaps.
Amendment to guidance on population of the price notation field for spread bets to bring into line with CESR 10-661 guidance.
Expansion of the guidance on quantity to note that OTC derivatives may be traded and reported on the quantity of shares/bonds or nominal size rather than the number of contracts.
The TRUP is proposed to be effective from the date of publication.
The FSA invites the public to submit comments not later than November 24, 2011.