We’ve answered some of our most frequently asked questions below to help you understand your transaction reporting obligations a little better.
Do I have to report transactions separately under both MiFIR & EMIR?
Yes, where both regimes require the transaction to be reported (e.g. an OTC derivative that has an underlying instrument that is venue traded (e.g. a company listed on the London Stock Exchange) will be reportable under both regimes by virtue of being a derivative (EMIR) and having a venue-traded underlying instrument (MiFIR)).
What is the overlap between MiFIR & EMIR Trade Reporting?
Whilst there is significant overlap in the data that is required, especially in relation to the specifics of a transaction (price, quantity etc), MiFIR transaction reporting requires much more granular information in terms of client identification. In contrast, EMIR reporting requires data relating to collateralisation. Accordingly, neither method of reporting adequately conveys the information requirements of the other.
Do MiFIR & EMIR reports go to the same place?
No – MiFIR reports are submitted to an Approved Reporting Mechanism (“ARM”) or direct to the National Competent Authority (“NCA”). EMIR reports are sent to Trade Repositories (“TR”). There are some entities which act in the capacity of both an ARM and a TR.
What are the objectives of each regime?
EMIR focuses on the reduction of systemic risk and helping prevent future financial system collapses, whereas MiFIR is centred on the detection of market abuse, strengthening investor protection and increasing the efficiency of the financial markets.
Do I identify my counterparties in the same way for both regimes?
|Corporate||Legal Entity Identifier (“LEI”)||LEI|
|Individual||an internally allocated client code and the country of residence||First name, surname, date of birth and a national identifier code which varies depending on the citizenship of the natural person, as provided in RTS 22.
For some jurisdictions, where the respective national identifier isn’t available, natural persons can be identified using a ‘CONCAT’ code which is a concatenation of country code, date of birth, first name and surname.
What data is required for both regimes?
Despite the difference in objective and data requirements of the EMIR & MiFIR regimes, there is still a significant amount of data that is required to be reported under both regimes. The overlap in information relates primarily to the execution of the transaction (such as execution time, quantity, price etc) as well as instrument data (Classification of Financial Instruments (“CFI”) & International Securities Identifier Number (“ISIN”) codes). Our article on CFI and ISIN codes explains this further.
However, despite the amount of overlap relating to transaction and instrument data that is required to be submitted, there are still considerable differences and aligning EMIR & MiFIR reporting provisions will not be without obstacles. In addition to the difference in how the participants to the trade are identified, there is the requirement to ascertain the reportability of transactions under the different regimes as well as the differences in trade lifecycle reporting obligations e.g. EMIR requires daily valuations of open contracts, whereas MiFIR doesn’t.
Can I Report Trades for both MiFIR & EMIR with one service?
By delegating your MiFIR & EMIR reporting to the same third party, it will reduce the need to produce two separate data flows with lots of data repetition. The third party can also assist your internal compliance function with ascertaining the reportability of your transactions under the different regimes and route your submissions to the ARM or TR for MiFIR & EMIR respectively. It is also likely to provide savings to your organisation when compared to maintaining separate relationships with an ARM and TR.
How can TRAction Fintech make it easier to report for both regimes?
TRAction Fintech’s regulatory trade reporting solution covers multiple reporting regimes so that the costs and resource burden for FX and CFD brokers can be reduced. While there are some overlaps and some differences in the reporting requirements under EMIR and MiFIR, reporting through a third party such as TRAction Fintech could save you time and money by streamlining your reporting.
Please contact us if you would like to know more about how to simplify your reporting for multiple regimes.
Quinn is co-CEO and founder of TRAction and focuses on assisting clients in Europe, Asia and Australia to meet their regulatory requirements with trade and transaction reporting solutions as well as development of the best execution platform. With a background in IT, Quinn started in the financial markets as IT Manager for City Index. He then co-founded and worked as a General Manager at one of Australia’s largest margin FX and CFD providers. Quinn has provided educational sessions to Australia’s regulatory bodies in relation to operational aspects of derivatives and trading platforms.