New trade body outlines its purpose: improving transaction reporting

INTERVIEW | With regulators in the UK and Europe revisiting the structure and purpose of transaction reporting regimes, a group of approved reporting mechanisms have come together with the objective of enhancing data quality and promoting accurate, compliant transaction reporting.

An approved reporting mechanism (ARM) is a regulated service provider used by financial firms to submit transaction details to national regulators. It acts as an intermediary, running pre-reporting checks and validations on trades and ensuring complex trade data is accurately formatted and validated before it reaches the authorities as well as storing and maintaining the static reference data so supervisors can analyse trading patterns to prevent market abuse.

Firms outsource their reporting to ARMs so their in-house teams don’t have to build expensive direct connections to regulatory databases. In late April, a group of European Securities and Markets Authority (ESMA) and UK Financial Conduct Authority (FCA) supervised ARM service providers launched The Approved Reporting Mechanism Association (TARMA) to represent the interests of ARMs across the UK and Europe. To date, the association consists of three founding members – Bloomberg Data Reporting Services, LSEG Regulatory Reporting Solutions and MarketAxess Post-Trade.

In an exclusive interview with PostTrade 360°, Jose Navarro (chief executive of regulatory reporting BV at LSEG and the first chair of TARMA), Brian Pinto, product manager at MarketAxess Post-Trade and Oliver Bishop, business manager regulated entities at Bloomberg explain the initial objectives of the association and explore some of the issues they hope to address down the line.

In the UK, the FCA’s recently announced consultation on improving the UK transaction reporting regime sets out proposals to simplify and modernise the transaction reporting framework. In parallel, EU authorities are progressing initiatives aimed at improving data quality, streamlining reporting obligations and reducing unnecessary complexity across financial market reporting regimes.

Taking this into account – and on the basis that although ARMs were previously jointly represented through APARMA—the trade association for Approved Publication Arrangements (APAs) and Approved Reporting Mechanisms (ARMs)—alongside approved publication arrangements or APAs, the changes in that space were taking up a lot of the time of that association – it was considered beneficial to create a dedicated approved reporting mechanism trade body.

“Our purpose is to help all approved reporting mechanisms respond to the significant volume of regulatory change that is coming in the UK and EU and sharpen the focus on data quality,” says Novarro.

“APARMA was heavily focused on the need to address issues impacting approved publication arrangements (such as consolidated tapes) and had a very positive influence through discussions with regulatory authorities,” he adds. “We see TARMA as having similar potential.”

First agenda item

One of the first tasks of the new body was to respond to the questions raised in the FCA’s November 2025 ‘improving the UK transaction reporting regime’ consultation paper.

TARMA expressed its support for streamlining and harmonising transaction and post-trade reporting regimes where appropriate in order to reduce ambiguity and duplication whilst maintaining a separation between UK and EU regimes.

It recommended prioritising the alignment of definitions and interpretation guidance for commonly used concepts and fields across the regimes and improving consistency in validation expectations and data quality controls. It further encouraged the FCA to continue leveraging the existing regulated reporting ecosystem to deliver scale benefits and operational discipline.

The association also called for improvements to the functionality of the FCA’s market data processor, the digital portal where investment firms, trading venues and approved reporting mechanisms submit required transaction reports.

UK vs EU approach

In early May, ESMA published two complementary reports setting out its strategy for more efficient transaction reporting across European markets. The authority has set out a strategic move away from fragmented national reporting towards a common EU reporting framework, centred on a single reporting template designed to remain proportionate for different fund sizes and investment strategies, while meeting supervisory needs. To support this approach, it has outlined a hybrid operational model under which data validation, storage and analytics would be organised at EU level, while data collection would remain at national level.

Most respondents to ESMA’s previous call for evidence indicated that overlapping and inconsistent reporting requirements, frequent and unsynchronised regulatory changes, fragmented reporting channels and dual reporting were major drivers of cost and complexity. ESMA has stated that it will further engage with markets participants before moving forward with final recommendations to be published by mid-2026.

“Our association wasn’t created by the time ESMA asked for submissions so we will engage with the regulator as it goes through the next phases,” says Navarro. On the question of the likely timeframe for when these proposals may be solidified, Pinto observes that progress from discussion paper to consultation paper to final report can take anything from six to eight months.

“For example, ESMA will go through the European Commission journals and conduct public hearings as part of the process of coming up with a final report,” he says. “Once that is published, the implementation period usually extends to between 18 and 24 months.”

Bishop adds that the FCA is expected to release a further publication in the summer and that at a high level in both jurisdictions, we can think of there being medium-term (less than five years) and longer-term activities.

“The EU is focusing on the latter in terms of setting some direction of travel and then potentially making some smaller changes in the interim, whereas the FCA has so far concentrated on medium-term activity and that is what the report scheduled to come out this summer will cover,” he says. “However, it is also setting up a post-trade and reporting task force, which is looking at a longer timeframe.”

Navarro agrees that both regimes are driven by a desire to reduce the long-term cost of regulatory reporting. “Their approaches can be divided into phases,” he says. “The initial phase is about reducing duplication within the current frameworks and the longer-term one is more focused on merging the different regulatory frameworks into what they are calling the ‘one report’ principle.”

The general view expressed by the approved reporting mechanism community is that a phased approach is the most pragmatic solution.

“One could argue that the biggest contributor to the reporting burden and cost is change, so it is a bit of a catch-22 situation,” continues Navarro. “In this case, change done in a controlled fashion would be accepting that reducing the current level of duplication in the different reporting mechanisms makes sense.”

Bishop notes that for the short- to medium-term changes outlined above, it has been relatively easy to understand where the common ground lies for approved reporting mechanisms.

TARMA’s key role

As for crystallising what TARMA sees as being its key role in terms of supporting better quality data, he explains that since the industry is directly supervised by ESMA in the EU as the rule-setting authority, it is well placed to have a healthy relationship with the regulator where it understands approved reporting mechanisms’ businesses and they understand the role of the regulator.

“Since MiFID II came into effect, we have put a huge amount of time and effort into improving data quality with both buy-side and sell-side firms so we have a good understanding of what has gone into getting MiFID data reporting quality to what it is now,” says Bishop.

TARMA also has a role to play in helping regulators navigate different industry dynamics as reforms are underway, he adds. “We are obviously still a relatively new organisation but we are to some extent following the same approach as APARMA.”

APARMA meets with each of its regulators a number of times a year and Bishop reckons TARMA will probably settle into a similar routine. “We hope that as ESMA goes through this incredibly complicated process of rewriting the rules in the EU, it can benefit from our input and the experiences of the firms that we work with,” he says.

Navarro adds that as regulated and supervised firms, there is a certain level of expectation and obligation on ARMs to adhere to and maintain data quality standards. “It is always going to be the reporting firm that has the final responsibility to make sure it is reporting correctly but one of our purposes is to effectively become a safety net between the investment firm and the regulator,” he says. “Ensuring data quality is the control and value we provide to investment firms.”

These firms report directly to regulators and if they get it wrong, the regulator will know straight away, concludes Navarro. “If you report to an ARM, we are the first line of defence.”