Market Watch 72

The Financial Conduct Authority (FCA) has published a new edition of its Market Watch (No. 72). This latest version primarily deals with „the quality of service provided by Approved Publication Arrangements (APAs) and Approved Reporting Mechanisms (ARMs), collectively known as Data Reporting Services Providers (DRSPs)“.
Specifically, the FCA has recently conducted a survey among DRSPs and their clients which primarily are investment firms using the data of DRSPs to fulfill their transaction reporting obligations. The purpose of the survey was to determine the quality of data provided by DRSPs and issues faced by investment firms in their dealing with such firms. The survey followed a Portfolio Letter issued earlier this year (please see EventID 16188) in which the FCA presented its current risk assessment with respect to DRSPs and its supervisory expectations and approach to supervision.
The findings from the survey are now outlined in the new Market Watch and are briefly noted below:
1. There were generally no connectivity issues faced by investment firms and most DSRPs offered two ways to connect to their systems: via API and via graphical user interfaces. Few investment firms encountered some difficulties which most DSRPs handled adequately.
2. As far as data quality is concerned, most investment firms did not observe „systematic data quality-related issues from their chosen DRSP“. DRSPs are encouraged to continue their work and to use additional validation rules to detect data quality gaps, as already done by some service providers.
3. The fees charged by Data Reporting Services Providers were rated satisfactory with more than 75% of respondent investment firms assigning at least 3 out of 5 possible rating points (with 5 being the best value for money).
4. Sometimes it was unclear to investment firms whether or not they had subscribed to ancillary services of DRSPs which are unregulated and for which investment firms are still held accountable. Thus, the FCA urges Data Reporting Services Providers to CLEARLY address any ancillary services in their contracts and to take steps that investment firms are aware of their responsibilities.
5. As far as switching barriers are concerned, most investment firms noted the IT-setup and IT-migration as the key barriers to switching Data Reporting Services Providers.
6. Overall, most investment firms were satisfied with their DRSPs and the services they provide. Some improvements could be made as regards the mitigation of (technical) issues in terms of keeping communication going until the matters are resolved.