Two years on from the publication of version 3 of the Transaction Reporting User Pack (TRUP), the FCA has proposed the issuance of a revised version which will be preceded by a period of consultation on the planned revisions, closing on 4 July 2014. The changes principally clarify existing guidance as well as correcting and updating the guidance text itself.
Key points
The consultation sets out the changes which are proposed to the TRUP to clarify existing guidance, including:
- Where the FCA expects firms to use the appropriate trading capacity and apply the correct use of the ‘INTERNAL’ code in their transaction reports when there are changes in their position or that of their clients at any given point in time. This enables the FCA to continue to monitor for market abuse effectively and limit the generation of false alerts.
- That firms should transaction report the resultant transaction when they hit their own order on a trading venue where “inadvertent crossing of transactions on trading venues occurs during the ordinary course of business”, and should not mark these as internal transactions (as would apply to internal book transfers, for instance).
- Where firms are reliant on the Liffe feed for transaction reporting the market side, duplicate transactions have been seen when firms have also reported market side trades as principal or have reported principal cross trades for the market and client sides through their ARMs – the TRUP will be changed to state that “Firms should ensure that where they rely on the [Liffe] feed they do not also report the market side of the transaction through their ARM”.
- Clarification on how the unit price should be reported for different instruments, namely what is meant by reporting as a percentage, and that the unit price for derivatives other than bond futures, CDS or spread bets should be reported as the price per underlying security or unit.
- Updated guidance on how to report on-market transactions following the change by Swift to allow for both an Operating (Parent) MIC and Segment (Child) MICs.
- Further clarification on the steps firms should take to implement effective TR governance and comply with their SYSC obligations, with particular reference to issues that have arisen with firms’ reconciliations, static data set-up and maintenance, change management activities, training and documentation processes.
- The consultation document also specifies various other amendments which will be made such as updates to certain references and exchanges which have changed since the last publication of the TRUP.
- Following the closure of the consultation period on 4 July, firms will be given six months to implement any changes resulting from the publication of the finalized document.
