Where to report?

For some investment firms, the transaction reporting requirements under the Markets in Financial Instruments Directive (MiFID) are a revamp of those existing under the Investment Services Directive (ISD). The UK and Germany, for example, have already established transaction reporting rules but other member states, notably in Scandinavia, have not. There is also variation in the regulators’ approach to enforcing the rules. Published actions against major banks in the recent past signal that the Financial Services Authority (FSA) is certainly serious about the need to comply. Helen Benjamin and Aaron Caplan of PricewaterhouseCoopers LLP, consider the impact of MiFID on transaction reporting, focusing on the implications for branches.

Helen Benjamin may be contacted on tel: +44 (0) 20 721 28801; email: helen.benjamin@uk.pwc.com. Aaron Caplan may be reached on tel: +44 (0) 20 780 45279; email: aaron.caplan@uk.pwc.com

The scope for varied application of requirements under the Investment Services Directive (ISD) means that currently the picture is uneven across the EU with some member states having implemented transaction reporting rules while, at the same time, certain transactions, which should be reported, probably not reaching any competent authority at all. This variation in application and scope has limited the degree to which competent authorities are able to monitor the activity of investment firms with a view to detecting, for instance, market abuse. Moreover, since under the ISD no obligation exists for competent authorities to share information, it was always unlikely that potentially abusive activity with a cross-border dimension that could be detected was going to be. Unless a single European repository for all transaction reports is created this situation is likely to persist.