Following a no-deal Brexit, reporting obligations under the second Markets in Financial Instruments Directive (“MiFID II”) will be very similar to the current requirements as per our article “Two Weeks Until Brexit: What Should I be Preparing?”.
However, in the event where a European Union (“EU”) investment firm has executed its transactions via a United Kingdom (“UK”) branch or vice versa, the entity will have a dual reporting obligation. The Financial Conduct Authority (“FCA”) made it clear that the branch will no longer be able to discharge the reporting obligations by transmitting orders to the other entities. In this event, an investment firm will need to be contracted to both a UK ARM as well as an EU ARM to allow the functionality of dual reporting.
As illustrated in the diagram above, assuming the trade is executed via the UK branch of the EU investment firm, the UK branch will have an obligation to report to the FCA under UK MiFID II and the EU investment firm will have an obligation to report to the EU NCA under EU MiFID II.
How can TRAction help?
For those investment firms with a branch in another jurisdiction, TRAction is able to split the transaction reports and submit them in accordance with the local regulatory requirements.
If you would like to know how TRAction can help you to prepare for Brexit, please contact us.
Quinn is co-CEO and founder of TRAction 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.