Case Study

MiFID II Transaction Reporting Analysis

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Customer Challenge

A mid-cap UK stockbroker required a detailed gap analysis between existing transaction reporting requirements under MiFID I and the additional requirements under MiFID II. This included integration with their chosen ARM’s specifications and the validation of end-to-end processes.

With no existing framework for transaction reporting analytics, the client needed Citihub to apply MiFID II expertise to identify and document all business flows and the implications of the new transaction reporting requirements on each.

How Citihub Helped

Citihub began by engaging stakeholder in a scoping exercise, to assess and understand the complexity and boundaries of the task. This allowed a fixed price proposal to be structured around the number of trade flows, products traded and timelines for completion.

The discovery phase involved speaking to key business and IT stakeholders to understand trade flows and identify primary attributes which could help to correctly classify transactions. Deep understanding of the regulation allowed Citihub to focus these conversations on the key factors involved in identifying qualifying trades.

Although the regulation was not yet live, an existing transaction reporting system delivered MiFID I requirements. However, there were many incorrect or outdated rules in this system which needed to be cleaned prior to any updates. Citihub began by creating a framework that documented each business flow and to detail which of the 65 MiFID II transaction reporting fields apply to each of them individually.

Once all the flows were documented and fields marked as required, Citihub was able to start determine and place the correct values. This involved referring to ESMA guidance in order to validate field information. It was also necessary to ensure that all required information was readily available in the transaction reporting system and create new data streams from the trading system.

Citihub gave the client real-time transparency to the state of the assessment as well as regular status reports, and kept the client abreast of risks and issues throughout.

Due to the high levels of standardisation and automation Citihub applied, the programme deliverables far exceeded client expectations and the level of documentation provided became the standard that the client now adheres to.

Results

Front office experience
Citihub’s experience in dealing with front office trading systems and businesses allowed a more precise approach to the problem than was possible with a traditional data analytics project. By obtaining a detailed understanding of front office trade flows and the respective environments, Citihub were able to address the issues with data consistency and provide guidance on standards and best practices.

Technical documentation
There was a large gap in documentation explaining the various trade flows used by the client. This meant that compliance with MiFID II requirements could not easily be evidenced to the regulator or auditors in a timely manner. Citihub delivered a series of schematics with detailed commentary to provide a solution to this problem. The documentation introduced by Citihub provided full transparency allowing information to be readily available for audits ahead of time.

A value-add delivery
The project delivered a reusable transaction reporting framework that exceeded progamme requirements. This led to easier and more effective testing and monitoring transaction report submissions and allowed a proactive approach to addressing potential data quality and/or reporting issues. These deliverables went beyond the original scope of the engagement and is an approach that is consistent with Citihub’s client focus and values.

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