Unpacking MiFIR Transaction Reporting: Are rolling spot FX and metals reportable?

Currently, there is some uncertainty in the market about whether CFDs on spot FX and metals, as traded in MT4, MT5, cTrader and similar platforms, are reportable under MiFIR.  The uncertainty stems from the expanded scope of reporting under Article 26(2) of MiFIR to include financial instruments admitted to trading or traded on an EU trading venue.

EU “trading venue” includes the Multilateral Trading Facilities (MTF), Organised Trading Facility (OTF) and Regulated Market (RM) and financial instruments where the underlying financial instrument is traded on a trading venue (CFDs, indices, ETFs etc).  Article 26 of MiFIR states “The obligation shall apply to transactions in financial instruments …. irrespective of whether or not such transactions are carried out on the trading venue”.

The list of MTFs can be found on ESMA’s MTF register.  In contrast, MiFID I only covered Regulated Markets (stock exchanges and futures exchanges etc).

One view is that as CFDs on spot FX and metals are not derived from a trading venue (as the price feed normally comes from the interbank market), they are not technically reportable under MiFIR.

The alternative view is that as essentially the same product is admitted to a trading venue (rolling spot FX is traded by LMAX, an MTF), it is therefore reportable under MiFIR.

While we are awaiting further clarification from ESMA and National Competent Authorities, we are advising our clients to be prepared for both spot FX and metals to be reported under MiFIR from 3 January 2018 onwards.

If the general consensus on 3 January 2018 is that these instruments not reportable, we will simply filter them out of the enriched reports we sent to the Approved Reporting Mechanism (in the same way we currently carve out out Bitcoin CFDs and similar products).

If you have any questions or would like to discuss the above, please contact us on +44 20 8050 1317.