MiFID II reporting quality and process struggles continue
05 December 2019 London
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Firms are still struggling with reporting quality and process in relation to MiFID II, according to Cappitech second annual MiFID II and Best Execution Survey', 'Firms are still struggling with reporting quality and process in relation to the second Markets in Financial Instruments Directive (MiFID II), according to Cappitech second annual MiFID II and Best Execution Survey.The survey highlighted the growing understanding of the value of external reviews as a solution and the desire to have solutions that can analyse reporting data for business insights.The report, authored by Mark Kelly, a member of the Cappitech advisory board, suggested the reporting regimes requirements have not yet grasped and warned that while none of the 31.6 percent of respondents who have received feedback from the regulators as to the quality of their submissions have been fined, the more relaxed approach is unlikely to continue indefinitely.Kelly said: The survey results point to firms still not being fully comfortable with MiFID II reporting requirements. At the beginning of 2019, firms had told us that this year would be one of setting KPIs and reviewing data quality, but this process is clearly happening more slowly than anticipated.He added: The use of external analysis and tools to spot problems may alleviate some of these challenges on the basis of don't mark your own homework which will be important as the regulators will start to impose sanctions on firms who are not managing their data appropriately.The survey also showed that 68 percent plan to use existing reporting solutions for future regulatory requirements with 64 percent thinking it important or very important to have one solution across all reporting regimes.Elsewhere, only 55 percent are monitoring their reporting daily but often fail to heed the call for periodic reconciliations.The largest issue with reporting MiFID II is reconciliation, with 44 percent of respondents identifying reconciliation as their main pain point.It also found that feedback from regulators has been limited with 68.4 percent of respondents answering that they have not received comments on MiFID II compliance from the national competent authority.Ronen Kertis, CEO and founder of Cappitech, commented: Firms are not fully complying with monitoring best execution requirements. They also face far-reaching challenges such as reconciliation—which was particularly highlighted together with not having the internal expertise to keep up with the fast-changing regulations. We believe that third party providers are a good way to overcome these challenges by providing domain expertise gained through dealing with many similar clients. Using the right vendor also helps address the other clear preference raised by 64 percent of respondents saying it is important to streamline their reporting obligations by using a single solution or vendor.
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