Market Commentary

TORSTONE CLIENTS BEGIN TESTING MIFIR REPORTING TOOL

Brian Collings

Published March 24, 2017

Transaction Reporting Module Offers Users Maximum Control and Speed to Market

Torstone Technology is now allowing clients to begin testing of InfernoRC, the firm’s standalone MiFIR (Markets in Financial Instruments Regulation) module.

InfernoRC will help clients to comply with the transaction reporting obligations of the new regulation, including the reporting of a much wider range of financial instruments and the disclosure of additional mandatory data.

The InfernoRC module automatically receives the requisite transaction data from multiple front-office systems used by clients. This is then enriched and routed via one of the Approved Reporting Mechanisms (ARM) for validation and reporting to any one of the 35 National Competent Authorities (NCAs) across Europe.

Torstone’s InfernoRC is ARM agnostic and will provide connectivity to report transactions through whichever ARM is being utilised by their client. This flexibility also allows Torstone’s clients to easily connect to new ARMs should they switch.

InfernoRC provides a comprehensive workflow for transaction reporting; managing the capture and storage of report sensitive information, the data enrichment and report generation function, alerting and resolution of exceptions, the submission of transaction reports, monitoring the file delivery and validation function as well as the execution to the NCA by the ARM. Inferno’s core reconciliation function provides validation of the report submitted to the NCA by the ARM, a key requirement of the regulation.

First to market

Torstone has been developing InfernoRC to meet the requirements for transaction reporting for more than six months and is one of the first vendors to begin live testing with clients which include some of the UK’s leading brokers.

Speed of implementation

InfernoRC has been built as an automated, scalable and flexible solution designed for rapid deployment. This allows clients to enter a UAT environment within six weeks. Standard testing cycles run concurrently during the installation, bringing the client to a potential ‘Go Live’ state within seven weeks.

Being ready for the 3 January 2018 MIFIR implementation date is critically important for market participants as is it widely expected that financial penalties for non-compliance or misreporting under MiFIR will start immediately after the regulation implementation date.

Maximum control

InfernoRC sources and validates data from disparate sources, including transaction information from trading platforms, static data such as national insurance numbers, LEIs and CFI codes, in addition to asset related data from secondary and tertiary sources. This information is captured and stored securely in the InfernoRC application database. The transaction report is generated, containing the correct information in the correct format for distribution to the ARM of choice.

Exceptions are presented to the user through the browser based UI, providing a means to resolve data errors and afford four-eye verification prior to submission to the ARM.

Clients have full control of the data at all stages of the transaction reporting lifecycle. In addition to sourcing and validating data, InfernoRC will satisfy all data security, data privacy and data quality requirements on the information collated.

MiFIR transaction reporting obligations

The most significant changes to the transaction reporting requirements in MiFIR are:

  • Obligation to supply ‘natural person identifiers’: this will require the provision of a national insurance code/ ID code for the decision maker behind a transaction and if different, the individual actually executing the trade. If the trade was generated or executed by a computer algorithm then the relevant identifier code for the algorithm is used.

Investment firms will also be required to report client ID codes, ensuring that this information is reflected across the entire order transmittal and execution chain.

  • Instrument classification data

In MiFIR, transactions across an extended universe of asset classes are to be reported creating a greater degree of complexity if firms are using multiple order management systems for each asset class they trade. To minimise the operational burden of this aspect of the regulation, InfernoRC will direct trade flow from different systems to the consolidated module to enable efficient transaction reporting.

Avoid the Rush

A large number of organisations will need to change the way they currently report their transactions and for many organisations this will be the first time they will be required to report. Act now and avoid the rush by contacting Torstone today.