MiFID II Transaction Reporting System

MiFID II transaction reporting has highly enhanced the relationship between European members by enabling them to share a system that protects the investors. It does this by monitoring the participant of a given market and the behavior they portray so as to detect the abuse of a market. Each member of the market has the responsibility of reporting all the transactions they have made in their firms accurately, not later than the working day that follows. Even the decision they make on their investment must be reported too. The system also requires you to enter every detail of all the clients that you deal with within your firm. For any firm to join MiFID II transaction reporting they must go through the registration process by AFM.

The system has the following features

It can give a false sense of safety. Sometimes if the system is not well regulated and observed, it can cause a lot of errors that may have adverse effects on the market. The errors can pile up without being noticed for months and even years.

It is complex. It is a flexible system being shared by multiple members who report their transaction details every day. Multiple transactions occur daily in these different firms, and this makes information too much; hence the system becomes complex.

Monitoring is a requirement for the MiFID II transaction reporting. To avoid errors, there should be professional monitoring of the system always. This enables track errors that can cause expensive losses

Benefits of MiFID II Transaction Reporting System

It enables the identification and investigation of suspected market malpractices. Reviewing this report is an integral part of any research being done on suspected market abuse that has been reported by the national authority. It develops a bigger understanding of the need for transaction reporting.

It helps in maintaining market integrity. This reporting provides regulatory bodies with a supervision and enforcement tool, which ensures that the market is still leading in financial status.

It ensures that investment firms report accurate and complete details of their transactions. This will allow examining operational risks and oversight to provide assurance. This enables the regulatory body to explore how firms manage outsourcing risk and also establish a functional approach to ensure compliance.

It addresses issues on transparency, market infrastructure, and investor protection. This is because it comprises of the Market in Financial Instrument Regulation, also known as MiFIR and the Directive and regulation. It ensures transparency by improving record-keeping of company transactions.