Markit BOAT working to tuck trade reporting gaps

By Olesya Dmitracova and Richard Barley

LONDON (Reuters) - Markit BOAT, a platform for reporting European over-the-counter equity trades, is working with clients to change the practice of delayed reporting, which sometimes defeats the purpose of new European Union rules.

Mandatory transparency rules on share trading came into force across the bloc last November with the introduction of the Markets in Financial Instruments Directive or MiFID.

However, MiFID allows reports on trades of a certain size to be delayed by up to three days, depending on the size of the trade and the average daily turnover of that security.

"The practitioners that are reporting OTC trades ... have used, by and large, the lowest common denominator approach: if it's capable of being delayed, it will be delayed to the maximum," Markit Managing Director Will Meldrum told the Reuters Exchanges and Trading Summit on Wednesday.

"That's not that handy for professionals in the market, neither for the buy side nor the sell side, mainly because some trades don't need to be delayed, and some don't need to delayed as long as they are," Meldrum added.

Markit BOAT is working with both the buy side and the sell side on best practice guidelines for "appropriate and measured" delays.

"We know that of all our trades -- we do around 25-30 billion euros per day across the platform -- around 25-30 percent is delayed, by one hour to three days," he added.

As soon as a party has completed a large, time-consuming trade, it should be disclosed to the market, Meldrum said. "If they're off risk or have never been on risk in the first place, then that trade should be reported."  Continued...