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The T stands for transaction date, which is the day the transaction takes place. The number 1 denotes how many days after the transaction date the initial report of the transaction must be submitted to a Trade Repository. In effect, the report must be submitted no later than the working day following the event.
Counterparties which are subject to reporting obligations may delegate reporting, however it must be ensured that there is no reporting duplication. When counterparties delegate reporting, they retain the responsibility for the accuracy and timely submission of the reports.
A Legal Entity Identifier (or LEI), is a unique 20-character code that identifies distinct legal entities that engage in financial transactions.
The reporting of derivative transactions to TRs under ASIC, EMIR and MiFIR requires an LEI.
There are a number of reporting regimes including EMIR, MiFID II/MiFIR, SFTR and Best Execution, all of which affect Investment Firms (IFs) in different ways. Read more to see the regulatory reporting required by IFs.
We cover the answer to this question in our article here.
The European Market Infrastructure Regulation (EMIR) is EU legislation for the regulation of over-the-counter (OTC) and exchange-traded derivatives. The regulations include requirements for reporting of derivative contracts and implementation of risk management standards. It established common rules for central counterparties and Trade Repositories (TRs). The objective of the legislation is to reduce systemic counterparty and operational risk, and help prevent future financial system collapses.
Counterparties which are subject to reporting obligations may delegate their EMIR reporting, however it must be ensured that there is no reporting duplication. When counterparties delegate reporting, they retain the responsibility for the accuracy and timely submission of the reports.
UK EMIR is the UK version of EMIR.
The European Union (Withdrawal) Act 2018 (EUWA) enables the EMIR to be converted into UK law.
UK EMIR will be essentially the same as EMIR with minor differences. The differences include:
FCA will be the counterpart of ESMA
Amendment and revocation of the current EMIR regulations
(a) Legal terms amended with reference to the UK legislationYes, rolling spot forex transactions are reportable under EMIR.
“Rolling Spot Forex Contract” is defined in the FCA Handbook to mean a future or contract-for-difference in forex / foreign exchange, entered into for speculative purposes. Both futures contracts and contracts-for-difference are covered by the definition of “derivative” under Article 2(5) of EMIR. Therefore in the UK, rolling spot forex transactions are subject to reporting under EMIR.
No, if settled ≤ T+2.
ESMA have confirmed in their Q&A that “The EMIR reporting obligations covers all derivatives.”
As noted in EMIR Article 2(5), ‘‘derivative’ or ‘derivative contract’ means a financial instrument as set out in points (4) to (10) of Section C of Annex I to Directive 2004/39/EC as implemented by Article 38 and 39 of Regulation (EC) No 1287/2006.
No. Corporate entities are classified as either financial counterparties or non-financial counterparties. Both are obliged to report trades under EMIR.
No. The EMIR reporting obligation covers most participants involved in a trade other than natural persons and non-EU and non-EEA.
A Trade Repository (TR) is an entity that centrally collects and maintains the records of OTC and exchange-traded derivatives. TRs play a central role in enhancing the transparency of derivative markets and reducing risks to financial stability. TRs are registered and supervised in the EU by the European Securities and Markets Authority (ESMA) under the European Market Infrastructure Regulation (EMIR).
The TRs are currently registered with, and recognised by, ESMA can be found here.
It is possible to use position level reporting as a supplement to trade level reporting. It is not permissible to report only positions.
The T stands for transaction date, which is the day the transaction takes place. The number 1 denotes how many days after the transaction date the initial report of the transaction must be submitted to a TR. In effect, the report must be submitted no later than midnight on the working day following the event.
Yes where it is a derivative under Article 2(5) of EMIR. E.g. A spread-bet on a currency pair would be reportable under EMIR. A spread-bet on a sporting event would not.
The level 3 Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) were a revision of the existing applicable standards. They entered into force on 10 February 2017 and have applied since 1 November 2017.
The key changes were:
Why the changes?
Since the start of EMIR Reporting, ESMA has been providing guidance via their Q&As and looking to clarify certain aspects of the regime. The revised RTS and ITS allow the incorporation of these years of guidance and clarity directly into the technical standards. It also allows the addition of new fields and values to better reflect market practice as well as the opportunity to better align EMIR standards with the upcoming MiFIR transaction reporting.
EMIR Refit is an amendment and simplification of EMIR, aimed to reduce disproportionate costs and burdens on counterparties without compromising the objectives of the initial EMIR implementation.
ESMA has sought to align EMIR with international, widely used formatting of data reports. EMIR will adopt ISO 20022 XML which is currently used for other regulatory regimes.
With the inclusion of 89 new reporting fields and the elimination of 15 previous fields, the total number of reporting fields under EMIR has increased from 129 to 203.
EMIR Refit aims to increase transparency of trade life cycles by introducing Event Types alongside the currently reported Action Types. This will provide more granularity about the specific business event triggering a given report.
EU EMIR Refit rules will go live on 29 April 2024.
UK EMIR Refit will go live on 30 September 2024.
MiFIR & MiFID II apply to investment firms within EEA member states and their branches located outside of the EEA when they engage in a transaction in a reportable instrument. Also, investment firms from outside the EEA will have a reporting obligation when operating from branches or subsidiaries within the EEA.
MiFIR introduced a number of significant changes to the transaction reporting regime, including:
MiFIR transaction reporting enables NCAs to detect and investigate potential instances of market abuse and monitor the fair and orderly functioning of the markets. There is no real change from the purpose of the existing MiFID I transaction reporting; however, MiFIR was formulated after the MiFID review to better meet the requirements of regulators.
These requirements include more harmonised reporting across EEA. The process under MIFID I allowed some room for interpretation which made it difficult for the NCAs to understand reports received from other NCAs and for firms to report to multiple NCAs.
Regulators also need to reflect instruments caught by the Directive on criminal sanctions for market abuse 2014/57/EU (“the Market Abuse Directive”). Under the MIFID I transaction reporting, firms only needed to report equity (i.e. stocks) and debt related instruments (i.e. bonds).
Simply put, the regulators need more help to detect market abuse.
The Markets in Financial Instruments Regulation 600/2014 (MiFIR) in the European Union (EU) is legislation which commenced on 3 January 2018. It was formulated to support the obligation to uphold integrity of the markets by National Competent Authorities (NCAs).
MiFIR includes a reporting obligation, whereby firms which execute transactions in reportable financial instruments (see section C of Annex I on page 133) need to report complete and accurate details of the transaction (trade) to the NCA as quickly as possible and no later than the next working day.
The Markets in Financial Instruments Directive 2014/65 (“MiFID II”) is European legislation that is set to significantly change the functioning and regulation of financial markets in Europe. MiFID II is the successor to MiFID I and makes changes to the original regime in areas including execution practices, regulatory reporting, conflicts of interest and passporting. Its legal form as a directive necessitates separate implementation in the legislation of each EEA member state. Learn more on our MiFID II page.
It is possible that there are conflicts between information restrictions from GDPR and reporting requirements under MiFIR. However, as the respective aims of the two regulations are not at odds (data protection for EEA residents and disclosure of derivative information to national regulators), any conflict should be capable of being resolved. The priority should focus on the MiFIR regulatory changes first and then assessing whether requirements under the GDPR has changed the regulatory reporting.
While EMIR and MiFIR are separate reporting regimes and have different reporting fields, some aspects of reporting can be combined such as producing a single data extract which covers the requirements of both. Keep an eye out on our upcoming blog article for further details.
Firms need to report details of transactions to the NCA as quickly as possible and no later than the close of the following working day (T+1).
Firms must report to the NCA using one of the following methods:
Non-EEA firms will have a MiFIR reporting obligation when operating from a branch within the EEA. Keep an eye out for our upcoming blog article on the extra-territorial reach of MiFIR.
Under MiFID II transaction reporting requirements, firms need to report to their host state regulator, the National Competent Authority (NCA). For MiFIR, firms will need to report to their “home state” NCA. E.g. The UK branch of a French investment firm would report to the AMF in France rather than the FCA.
The instrument identification code is the code used to identify the financial instrument. The ISIN code will be the only way of identifying venue traded instruments. Non-venue traded instruments will require an ISIN code for the underlying instrument or an ISIN or index name where the underlying is an index. See here for a detailed explanation on product identifier requirements.
Under MiFIR, the types of trading venues are:
For more details, visit our infographic.
‘Financial instrument’s are defined in Section C of Annex I of MiFID II. It includes, amongst many others, transferable securities, money market instruments, financial contracts-for-difference and derivative contracts relating to securities, currencies, interest rates or yields, emission allowances and commodities.
MiFIR RTS 22 also includes some exclusions:
In the MiFIR RTS 22 (Regulatory Technical Standards), a transaction is broadly defined as:
Securities Financing Transaction. An SFT could be any transaction in which securities are used to borrow cash or vice versa.
Securities Financing Transaction Regulation, better known as SFTR, came into force from 13 July 2020. Financial instruments that fall within the scope of the regulation are required to be reported to an authorised Trade Repository under Article 4 of SFTR and UK SFTR (post-Brexit).
SFTR began as a European Union (EU) regulation which was introduced with the aim of reducing systemic risk in the Securities Financing Transaction (SFT) market by increasing transparency and surveillance. The United Kingdom also adopted the SFTR regulation as part of onshoring existing regulations prior to Brexit.
A repurchase transaction is a transaction governed by an agreement where
No, both CFD and margin trading accounts are not within the scope of SFTR.
Both Financial Counterparties and Non-Financial Counterparties* have reporting obligations which cover the following:
*Excluding NFC-.
Reporting obligations for non-financial counterparties (except NFC-) commenced on 11 January 2021.
Only Financial Counterparties have reporting obligations, which cover the following:
Non-Financial Dounterparties don’t have reporting obligations.
Additionally, where a counterparty to a SFT is in scope of the SFTR reporting obligation, all legal entities that are involved in the chain of that transaction will need to be identified in the transaction report with a valid LEI, including the other counterparty and regardless of that counterparty’s jurisdiction.
If the transaction was entered between a financial counterparty and a small Non-Financial Counterparty (NFC-), the financial counterparty is required to report for both sides.
A NFC- means a Non-Financial Counterparty which does not exceed the limits of at least 2 of the 3 following criteria:
(a) balance sheet total: EUR 20 000 000;
(b) net turnover: EUR 40 000 000;
(c) average number of employees during the financial year: 250.
Reports are required to be submitted to an authorised TR by no later than one working day after the SFT has been made (T+1).
SFTR reports are required to be submitted in the XML file format in accordance with the ISO 20022 methodology.
Not necessarily. A broker may hold a “125K” matched principal licence from a regulator. However, it may not meet the more stringent MiFID II definition of ‘matched principal’ in Article 4(38) of MiFID II. The MiFID II definition outlines three characteristics that must all be present for the definition to be met”:
Trades conducted by most CFD/ FX brokers would not meet these requirements and therefore not be considered matched principal trades. See our article on this subject for more information.
Yes, if you are not engaging in “matched principal” trading per the MiFID II definition, you will be required to report transactions with liquidity providers as well as transactions with clients.
Under EMIR you may have been relying on your liquidity providers to report your trades. This relief is not available for MiFID II.
Two reports need to be submitted. That is:
are required to be made where you are not engaging in matched principal trading as defined in MiFID II (described in the question above).
Even if you hold a “125K” limited licence and engage in matched principal trading from a regulatory perspective, you may not meet the more stringent MiFID II definition of matched principal trading. In this case, you would be required to submit two transaction reports including a separate report between you as the broker and the liquidity provider.
Where a client or other person from outside the investment firm makes a decision about execution by providing instructions to this effect, you should populate field 59 (execution within firm) with “NORE”. Otherwise, you will need to report the natural person identifier or an algorithm code of the person or system respectively making the investment decision.
Field 57 (investment decision within firm) will need to be populated with the natural person identifier or an algorithm code, based on whether the investment decision was made by a natural person or algorithm.
A firm with a 125K matched principal licence operating on an STP model through which orders are not undertaken simultaneously would be required to submit two transaction reports. The reports would be populated to show that the broker was dealing on own account and an algorithm was responsible for the execution and the investment decision.
Relief from reporting counterparty LEIs for ASIC OTC derivative reporting has ended. Review our article to determine whether it is the trust or trustee which should obtain an LEI for your ASIC OTC derivative reporting purposes.
No. Due to an anomaly in the legislation, brokers with retail clients or clients that are not Reporting Entities don’t have to report how much collateral was posted by the client. Brokers only have to report the collateral that they post for trades, i.e. hedging trades. Again, single-sided relief may apply to your hedging trades meaning the collateral you have posted with your hedging counterparty doesn’t get reported to any trade repository.
There isn’t one. We suggest you choose an end of day that aligns with the end of day on your servers and your current reporting processes and stick to it (subject to daylight savings which shifts the end of day for many brokers twice a year by one hour).
No, as most brokers will benefit from single sided relief, therefore not having to report all or some of their hedging trades (trades done with another reporting entity), there would be no possible way to extract or calculate the ‘risk model’ of the broker from the data provided to TRAction.
In cases that the client is an individual, the ASIC reporting rules require a unique ID and the client’s legal name. No phone numbers, emails or addresses are required in the reports.
To obtain the benefit of the relief, the other party to the OTC derivative must be:
(a) a reporting entity required to report information about the trade under the Reporting Rules and not relieved from that requirement under the single-sided relief;
(b) a reporting entity who otherwise reports information about the trade under the Reporting Rules; or
(c) a foreign entity reporting under a ‘substantially equivalent’ foreign regime to an offshore prescribed repository and designates or tags the information reported as reported under the Reporting Rules.
The relief requirements are similar for transaction reporting and position reporting.
This means that no relief is available where the other party does not satisfy the above (eg end customer not a reporting entity).
This also means that, where an OTC derivative transaction is between two parties potentially entitled to the single-sided reporting relief, the parties will need to agree which of them will report the transaction.
The single-sided reporting relief will apply to:
(a) authorised deposit-taking institutions (ADIs);
(b) Australian financial services licensees (AFSLs);
(c) clearing and settlement facility licensees; and
(d) exempt foreign licensees,
with total gross notional outstanding positions across all OTC derivatives of less than A$5 billion at the end of each of two consecutive calendar quarters.
This is particularly relevant to the “Phase 3B entities” (with less than A$5 billion gross notional outstanding OTC derivative positions as at 30 June 2014), who became subject to the Reporting Rules for the first time on 4 December 2015.
For more information, please see our dedicated page on ASIC’s Single-Sided Reporting relief.
Single-sided reporting is where only one party is required to report under the ASIC Derivative Transaction Rules (Reporting) (Reporting Rules). Without single-sided reporting relief, the Reporting Rules require both parties to report.
OTC derivative issuers as reporting entities – to whom should they report under Australian law?
The answer generally depends on how the OTC derivative issuer is set up – whether it is
(1) an Australian entity;
(2) a foreign subsidiary of an Australian entity where the Australian entity is an authorised deposit-taking institution (ADI) or an Australian financial services (AFS) licensee;
(3) a foreign ADI that has a branch located in Australia or
(4) a foreign company that is required to be registered under Div 2 of Pt 5B.2 of the Corporations Act.
(1) Australian entity (i.e. entity, including a corporation, partnership, managed investment scheme or trust, incorporated or formed in Australia)
An Australian entity must report information about all the derivatives to which it is counterparty (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).
An Australian entity must report to a trade repository that is licensed by ASIC under the Corporations Act. There is currently only one trade repository that is licensed by ASIC under the Corporations Act – DTCC Data Repository (Singapore) Pte Ltd (in respect of commodity, credit, equity, foreign exchange and interest rate derivatives).
(2) Foreign subsidiary of an Australian entity, where the Australian entity is an ADI or an AFS licensee
A foreign subsidiary of an Australian entity, where the Australian entity is an ADI or an AFS licensee, must report information about all derivative transactions to which it is a counterparty (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).
Such a reporting entity can report to a licensed trade repository or a prescribed trade repository on an ongoing basis (subject to certain conditions being met) – see below.
(3) Foreign ADI that has a branch located in Australia
A foreign ADI that has a branch located in Australia must report information about all derivative transactions booked to the profit and loss account of the foreign ADI, or entered into by the foreign ADI, in Australia (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).
Such a reporting entity can report to a licensed trade repository or a prescribed trade repository on an ongoing basis (subject to certain conditions being met) – see below.
(4) Foreign company that is required to be registered under Div 2 of Pt 5B.2 of the Corporations Act
A foreign company required to be registered under the Corporations Act must report information about all derivative transactions booked to the profit and loss account of the foreign company, or entered into by the foreign company, in Australia (subject to the proposed single-sided reporting relief for certain transactions/positions for certain entities – see our separate article “Single-sided trade reporting – how will this help?”).
Such a reporting entity can report to a licensed trade repository or a prescribed trade repository on an ongoing basis (subject to certain conditions being met) – see below.
For a reporting entity referred to in (2), (3) or (4) above, such entity may (instead of reporting to a trade repository licensed by ASIC) report to a prescribed trade repository on an ongoing basis by reporting information under the requirements of a foreign jurisdiction, where those requirements are substantially equivalent to the requirements that would otherwise apply to the reporting entity.
As at Feb 2015, the jurisdictions that ASIC considers to have implemented reporting obligations that are substantially equivalent to the derivative transaction rules (reporting) are:
On 25 June 2015, ASIC made a determination prescribing several overseas trade repositories. These are:
A Trade Repository is an entity that centrally collects and maintains the records of over-the-counter (OTC) derivatives. These electronic platforms, acting as authoritative registries of key information regarding open OTC derivatives trades, provide an effective tool for mitigating the inherent opacity of OTC derivatives markets.
ASIC noted in the Report 482 that many Australian Financial Services Licensees incorrectly use an intermediary authorisation licensing exemption under s911A (2)(b) of Corporations Act 2001 to facilitate the issuing of retail OTC derivative products by their authorised representatives (ARs) when this is not permitted.
An AFSL holder can only appoint an AR to provide a financial service on the broker’s behalf as an agent, and not provide a financial service on its own behalf. This means the AR is not allowed to run a trading platform where they will be acting as an issuer or market maker in derivatives.
A legal arrangement we see sometimes is where an AFSL holder operates a trading platform using branding (and a registered “trading name”) similar to the AR’s company name. In this arrangement, the AFSL holder must remain as the issuer and market maker of derivatives, and therefore the counterparty to the customers. The broker therefore has the obligation to report relevant transactions to an Australian Derivatives Trade Repository (ADTR).
Where a broker has an Australian Financial Services Licence with appropriate authorisations to enter into an OTC derivative transaction with a customer (generally including issuer and market maker in derivatives), they will be counterparty to derivative transactions with its customers. The AFSL holder will then be Reporting Entity who has reporting obligations under the ASIC Derivative Transaction Rules (Reporting) 2013.
In Canada, there are 13 provincial regulators who are separately responsible for securities regulation in their respective provinces. The Canadian Securities Administrators (CSA) is an organisation that coordinates across the provinces. Canadian reporting requires firms to report OTC derivatives to a Trade Repository (TR).
The regulation includes requirements for:
Counterparties which are subject to reporting obligations may delegate their Canadian reporting, however it must be ensured that there is no reporting duplication. When counterparties delegate reporting, they retain the responsibility for the accuracy and timely submission of the reports.
Derivatives transactions involving at least one local counterparty are subject to reporting. The local counterparty is responsible for ensuring all reporting obligations have been fulfilled.
However, a local counterparty is under no obligation to report the derivatives transaction if:
The local counterparty is a counterparty to a transaction if one of more of the following apply:
A Trade Repository is an entity that centrally collects and maintains the records of over-the-counter (OTC) derivatives. These electronic platforms, acting as authoritative registries of key information regarding open OTC derivatives trades, provide an effective tool for mitigating the inherent opacity of OTC derivatives markets.
Reports are required to be submitted to an authorised TR by no later than one working day after the transaction has been made (T+1).
A Contract For Difference (CFD) is essentially a contract between an investor and a financial firm. At the end of the contract, the parties exchange the difference between the opening and closing prices of a specified financial instrument, including shares.
In Australia, CFDs are reported as equity derivatives in view of the underlying instrument, as outlined in ASIC Regulatory Guide (RG) 251, page 28. CFDs over other asset classes will be reported differently – TRAction can help you to determine the requirements.
In UK & Europe, depending upon the underlying asset class, CFDs are required to be reported under EMIR Regulation (EU) No 648/2012 or Markets in Financial Instruments Directive 2004/65/EU.
As Margin Foreign Exchange (FX) is decentralised many global regulators have implemented reporting regimes.
In Australia, Margin FX is reported under foreign exchange derivatives, as outlined in ASIC Regulatory Guide (RG) 251, page 28.
All non-Israeli firms who deal in Israeli Shekel derivatives have reporting obligations to the Bank of Israel on top of their standard jurisdictional reporting requirements. All non-Israeli firms who report above the threshold are required to report all OTC Derivatives on FX and rates which reference the Shekel.
The reporting threshold is equated to the daily value of Shekel trades executed, on a rolling period of one year (being 250 days in a year). Where the average daily value of Shekel trades executed is in excess of USD15m brokers are required to report. The reporting requirement will continue until another year has passed where the daily value of Shekel trades has not met the threshold.
The following is a list of reportable instruments where they are Shekel based, involve Shekels or reference a Shekel yield or interest rate:
Shekel reporting requirements are mandated under chapter 39(b) of the bank of Israel Law 5770-2010 and came into effect on 1 January 2017.
