FCA plans red tape crackdown to save firms £108m

The FCA is to launch a renewed drive to axe unnecessary reporting requirements and red tape in a move it claims will save regulated firms over £100m a year.

The FCA is today launching a consultation to further reduce and streamline submissions by regulated firms.

With encouragement from Chancellor Rachel Reeves, the FCA has been this year scaling back regulated firms’ reporting requirements to reduce red tape.

In September the FCA proposed reducing the frequency of submissions for selected sections of the Retail Mediation Activities Return (RMAR) and, in August, the FCA said it would reduce or remove regulatory returns for 95% of regulated firms, lowering the red tape burden for 36,000 firms.

The latest area targeted for red tape reform is set to be MiFID investment transaction reporting.

The FCA says the current annual cost of MiFID transaction reporting to the industry is £493m and it estimates its proposed changes will reduce the cost to approximately £385m, resulting in a net annual cost saving to the industry of £108m.

The FCA receives over 7 billion MiFID transaction reports a year which are used to support the ‘cleanliness, transparency and resilience’ of UK markets. The transaction reporting rules were introduced in 2018 and onshored from the EU on 31 December 2020.

To reduce costs for firms, the FCA proposes: 

• Removing foreign exchange derivatives from reporting requirements, reducing costs for over 400 firms 
• Removing reporting requirements for 6 million financial instruments including equities, bonds and certain derivatives that are only traded on EU trading venues 
• Reducing the period for correcting historic reporting errors from 5 to 3 years, lowering the number of transaction reports that need to be resubmitted by a third  

Therese Chambers, joint executive director of enforcement and market oversight, said: “Transaction reports are essential, helping us to detect financial crime and monitor the resilience of our markets. But we can be smarter, and by clarifying and streamlining requirements we expect to receive more accurate and complete reports. 

“Reducing costs while improving the quality of the data we receive is a no brainer. It means we can support growth and receive better market intelligence to act on.” 

The FCA says it will also work with the Bank of England and the Treasury to remove ”unnecessary duplication” of transaction and post-trade reporting requirements as part of a new long-term approach.  

• The consultation paper will be published by the FCA today.