Navigating financial transparency: An overview of the UK’s DRR and the EU’s DPE regimes

Key Takeaways

• New regimes to establish simpler and clearer rules for the reporting of OTC trades in the EU and the UK.
• Despite their differences, both regimes help firms understand who holds the obligation of ensuring that a trade is published.
• DRR and DPE bring clarity and accountability to off-exchange trade reporting, reflecting the broader goals of MiFID II and MiFIR.

With the UK’s Designated Reporter Regime (DRR) launched in April 2024 and the EU’s Designated Publishing Entity (DPE) regime put in place from February 2025, significant strides are being made to enhance the transparency of over-the-counter (OTC) trades.

These initiatives aim to improve the consistency of post-trade transparency for equities, and aim to increase market transparency and accountability through more accurate reporting.

They also both shift trade reporting responsibility from Systematic Internalizers (SIs) to firms respectively registered as Designated Reporters (DRs), or Designated Publication Entities (DPEs). These changes clarify reporting responsibility, allowing firms to register as DRs/DPEs regardless of SI status.

The previous MiFID regime created operational complexity, as firms had to take a trade-by-trade approach to determine whether it required to report an off-exchange trade, depending on if they were an SI in that instrument. An unintended consequence of that regime was that it forced firms to opt in as SIs, taking on costly pre-trade transparency obligations, to be able to offer to buy-side clients trade reporting services. As a result, SI liquidity was seen as potentially inflated due to reported volumes. With the advent of the new regimes, there is the expectation that the number of registered SIs will reduce.

Registers maintained by the FCA in the UK and ESMA in the EU make it easier to verify reporting responsibility based on LEI, streamlining the process. In addition, both initiatives form part of broader regulatory efforts to improve post-trade transparency in financial markets.

There are key differences, too. For example, DRR and DPE differ in their scope of application and their underlying regulatory framework.

Developed under the UK’s post-Brexit framework, the DRR centralizes reporting at the entity level, requiring designated reporters to take default responsibility to publish the OTC trade via an authorized publication arrangement (APA).

In contrast, DPE registration in the EU applies at the instrument class level, meaning the designated publishing entity is responsible for reporting trades in specific classes of financial instruments, such as shares or bonds.

Conclusion

The DRR and DPE regimes are key parts of the MiFIR reforms, aimed at improving transparency for OTC transactions. By enhancing post-trade transparency and reporting, these regimes bolster market stability and integrity. As they evolve, they will continue to shape a more transparent and accountable financial landscape.