Mind the transaction reporting gap

The EU and UK regulators are following their own paths and timelines to improve transaction reporting.

Firms will need to bridge the gap by using 2026 as a dual track year to get their engines started.

Technology will be an important component but so too will selecting the right vendors.

The European Union (EU) and UK may be on the same page in terms of shining a brighter light into transaction reporting, but post Brexit their paths, as expected, are diverging, in terms of requirements and implementation dates.

To begin with, firms need to understand the finer points of each legislation and the processes that are required. For example, the MiFIR Review is the EU’s attempt to modernise its rulebook and improve trading transparency and efficiency.  It is part of a wider regional push to simplify markets and ensure fairer access to data and trading.

In the summer, the European Securities and Markets Authority (ESMA) pushed the pause button and launched a consultation looking for industry feedback on the best ways to streamline the reporting of financial transactions across the bloc (https://www.esma.europa.eu/press-news/esma-news/streamlining-financial-transaction-reporting-esma-calls-input). This includes MiFIR, the European Market Infrastructure Regulation (EMIR) and the Securities Financing Transactions Regulation (SFTR).

The report attributes the decision to the challenges and complexities of piecing together 72,000 data points. This translates into scores of different datasets across 18 different regime which is not easy given the low-quality of the data available. This is reflected in the report’s findings from the over 20 financial services firms interviewed in Q2 25. While 85% started MiFIR programmes, they expressed concerns over the information available as well as a lack of a concrete plan to achieve the targeted 25% reduction in costs.

The industry will have to wait until early 2026 to receive the final edict from the consultation and ESMA’s recommendations on the best way to proceed.

As for the UK, its long-term objective is also to harmonise reporting across MiFIR, EMIR and SFTR, but a single “report once” model is not imminent. Instead, the country is focusing on a comprehensive redesign aimed at reducing unnecessary operational burdens and developing a more proportionate and cost-efficient framework for reporting institutions (https://www.fca.org.uk/publications/consultation-papers/cp25-32-improving-uk-transaction-reporting-regime).

A key plank is the removal of 13 reporting fields deemed no longer necessary, alongside updating terminology to align with UK EMIR. This includes, for example, replacing the concept of a “complex trade” “package transaction”, which will require new linking fields for instruments reported individually (same link as above).

Building a bridge

Navigating a path through two different legislative tracks is never easy. Transparency standards that were once aligned under MiFID II are now splitting into two regimes. However, there are steps that firms can take to make the journey easier. ION recommends viewing 2026 as a dual-track control year that gets systems and data ready. This entails developing different governance models because legacy approaches will not cope with the new demands. Silos should be broken down, and a single cross-sector team should be created to lead the charge to enable field alignment across transactions and funds.

Equally as important is the formulation of a new solution strategy The final mandate from both the FCA and ESMA may be unclear, but what is known. is the regulatory reporting market is in for significant disruption with a fragmented solution landscape. Regime-specific solutions will be challenged given the changes to reporting flows.

A better option are solutions that can provide comprehensive, integrated, modular and interoperable strategies in sync with the UK/EU dictionary and potential shared validation or hub services. Moreover, these strategies should be incorporated into the firm’s overall implementation roadmap and target operating model to avoid expensive delays and gaps.  Procurement and architecture decisions in 2026 will determine whether firms can plug into shared validation or hub models in 2028 without re-engineering.

The AI potential

Technology, of course, will provide the solutions and while there is a great deal of hype about AI, the tools are not yet able to deliver the requisite benefits in this case. This is because they require sustainable clean data, remediation of legacy breaks, and standardised, traceable, well-governed models. Once those foundations are in place, it can be a powerful accelerator but is not a replacement for core controls. For example, AI can be used to document, connect, and maintain clear lineage from regulatory text to internal controls, processes, and data. Models can also automate data cleansing and remediation workflows as well as identify systemic weaknesses.

Although there is no doubt that firms will be moving at their own pace, the message is they should not wait for the final edicts to be passed on. The main objectives will not change and next year is the time to start getting their operational and technological houses in order.