Monitoring the quality of transaction reports received under Article 26 of MiFIR

The CSSF issued a press release about the obligation of credit institutions and investment firms to report transactions in financial instruments as outlined in Article 26 of EU Regulation 600/2014 (MiFIR).
The CSSF informs reporting entities of the number of reports received and the quality and completeness campaigns conducted in 2022. The CSSF introduced the Quarterly Analytical Summary to provide investment firms with a quarterly overview of transaction reporting data quality, with results presented in the form of a dashboard that includes the number of flagged transaction reports. Investment firms are expected to analyze the data provided and fix potential flaws within their reporting tools and to correct erroneous and incomplete transaction reporting without delay.
Investment firms are also required to have procedures and mechanisms in place to identify unreported transactions, where the relevant transaction reports were rejected and not successfully re-submitted. The CSSF will verify the adequacy of these procedures and request a sample of investment firms to provide a detailed description of their reconciliation procedures for front-office trading records and transaction report data.
The goal is to improve the quality of transaction reporting and ensure compliance with MiFIR. The CSSF will also reconcile transaction reports received from different reporting entities pertaining to the same transaction. The CSSF reminds investment firms of their obligation to report complete and accurate details of transactions to the CSSF and encourages them to submit issue notifications if a systematic error is identified.
The CSSF will continue to provide the Quarterly Analytical Summary to investment firms, and the test methodology may evolve over the course of the year, with potential additional tests at an advanced development stage. These include consistency between the field quoting the executing entity and the two fields mentioning the transmitting entities, consistency of the country flag fields mentioning the branches that were involved in the reported transaction, and extension to other nationalities for which the CSSF checks the composition of the authorized national identifier for identifying natural persons.
By shifting the quality monitoring methodology, investment firms should be able to resolve several potential issues in one IT development cycle instead of correcting errors one by one, thus reducing the number of corrective interventions per transaction report in error.