The format and logical control (FLC) service is designed to reduce regulatory risks associated with repository reporting, in particular, the number of potential errors in transaction parameters reported by clients to the Trade Repository.
The most frequent reporting errors involve missed reporting deadlines; deviations from market rates and benchmark interest rate calculations; and inaccuracies in contract specifications, particularly regarding option premium.
Analysis of message structures from individual clients over previous years, which were flagged by the FLC service, shows that all service users experience a significant reduction in messages with incorrectly specified contract parameters. Similarly, the deadlines to report trades to the Trade Repository also improve.
In situations where violating legal requirements for reporting completeness, accuracy, and deadlines may result in an administrative fine up to RUB 500,000*, the FLC service is instrumental in reducing to a minimum the most common reporting errors.
NSD recommends that all clients, regardless of the number of trades they report, sign up for the FLC service. The FLC service is fully automated, ensures smooth operation without failures and does not affect the process of data reporting to the Trade Repository.
The FLC service uses 'soft' checks that do not affect the process of data recording in the Log of Incoming Messages and Contracts Register. Messages that fail any of the FLC checks are flagged and made available to the client for review and analysis. The messages themselves are still recorded in the Register in the usual manner. The client is also notified of what check the message has failed and, if necessary only, the Client independently or by contacting NSD, makes the decision whether to send a correction message for details in a previously registered contract in the Register.
Currently, format and logical control checks are performed with respect to the following: