Buy-side uncertain over MiFID II reporting penalties

Panellists at The Trade’s MiFID II event in Paris discussed the issues surrounding the buy-side’s reporting obligations.

Some buy-side firms have struggled to understand penalties for double reporting under the MiFID II reporting rules, according to a market expert speaking at The Trade’s MiFID II: Best Execution event in Paris.

A member of the audience asked panellists whether there is a risk the buy-side will report every specification of a trade, and how the regulators would handle this.

Panellists were quick to respond explaining buy-siders have a responsibility under MiFID II to not double report, and if they do, it could result in fines.

Rachel Hutchins, who is part of the trading solutions, compliance and regulation team at Bloomberg, advised delegates to organise reporting and record keeping projects together, to make the process easier.

“I’ve looked at transaction reporting and it’s clear to me, but I have gone through the failures and I think the buy-side have tried, where possible, to avoid reporting obligations.

“Maybe it’s a fear thing, but it’s not that difficult. The regulations are pretty straightforward and vendors are able to help you,” she concluded.

MiFID II’s reporting requirements are still widely misunderstood by buy-siders and industry participants.

The panel explained to delegates that the buy-side face bigger problems with complying to reporting rules as they have not had to deal with such requirements before.

Ashlin Kohler, director of global rates eCommerce FICC at Citi, said: “The first thing to note is that the buy-side didn’t catch on that they had a reporting requirement until quite recently.”

Bloomberg’s Hutchins echoed Kohler’s thoughts, explaining the buy-side did not have such requirements under MiFID I.

“The sell-side learnt a lot things from reporting under MiFID I. They have learnt from their mistakes and have been fined for those mistakes,” she explained.

Hutchins added: “The buy-side are doing this for the first time, and they have a lot to learn.”