MiFID II/MiFIR Reporting

Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation

MiFIR (the Markets in Financial Instruments Regulation) and MiFID II (the second Markets in Financial Instruments Directive came into effect on 3 January 2018. Due to Brexit, the EU regulations have been onshored under the European Union (Withdrawal) Act 2018

What Does it Stand For?

Markets in Financial Instruments Directive and Markets in Financial Instruments Regulation

What Does It Focus On?

Market integrity and tackling market abuse

Purpose

Enhance the efficiency and integrity of the financial markets across the European Union

Reporting Obligations

All investment firms are required to report specified transactions in financial instruments where they underlying instrument is traded on an EEA trading venue to an Approved Reporting Mechanism, on a T+1 basis.

EU MiFIR

The original MiFIR remains in force for EU member states. It continues to evolve under ESMA.

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UK MiFIR

The MiFIR regime was onshored into UK regulation. Over time it will diverge from the EU version as the FCA updates it.

MiFIR and MiFID II together govern all aspects of the financial markets, including trading and reporting of financial instruments. Transaction reporting obligations are a large part of the regulatory regime and are contained in MiFIR. TRAction provides a full-service MiFIR solution that can simplify your transaction reporting requirements. 

The scope of the MiFIR reporting regime includes:

  1. financial instruments admitted to trading or traded on an EEA trading venue or for which a request for admission to trading has been made;
  2. financial instruments where the underlying financial instrument is traded on a trading venue (ToTV) (guidelines state ‘underlying’ means immediate underlying instrument rather than ‘ultimate’ underlying instrument); and
  3. financial instruments where the underlying instrument is an index or a basket composed of financial instruments traded on a trading venue.

What is the reporting obligation?

As transaction reporting obligations are contained in the MiFIR regulation, there cannot be differing implementation between European nations. MiFIR imposes transaction reporting obligations in respect of specified transactions in financial instruments where the underlying instrument is traded on a European Economic Area (EEA) trading venue.

It is important to note that where an EU investment firm has executed its transactions via a UK branch or vice versa, the entity will have a dual reporting obligation. The FCA has made it clear post-Brexit that the branch will no longer be able to discharge the reporting obligations by transmitting orders to the other entities.

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Who is required to report?

Transaction reporting obligations extend to:

  • investment firms;
  • investment managers providing advice and portfolio management to individuals;
  • credit institutions;
  • market operators;
  • all financial counterparties under EMIR;
  • central counterparties and persons with proprietary rights to benchmarks; and
  • third-country firms providing investment services or activities within the EEA.

What to report and to whom?

There are 65 reporting fields under MiFIR, including:

  • identification of the relevant parties – the legal entity, natural person or algorithm which submitted the order, made the investment decision or executed the order;
  • identifying information – a Legal Entity Identifier (LEI) for legal entities and personal identification information for natural persons;
  • product classification and identification – CFIs and ISINs for financial products; and
  • date & time of trade – must be provided for each trade.

TRADE PARTIES

Details of legal entity, natural person or algorithm which executed the order. Same details are required for the counterparty on the other side of the trade.

IDENTIFIER

A Legal Entity Identifier (LEI) for legal entities or personal identification information for natural persons (e.g. National Identifier).

PRODUCT DETAILS & IDENTIFIER

Information about the financial instrument traded including asset class, CFI code, quantity, currency, venue, and ISIN if applicable.

DATE & TIME OF TRADE

Date and time of trade execution must be provided for each trade, and also for any cancellations.

Firms can report directly to their National Competent Authority (NCA), or indirectly through an Approved Reporting Mechanism (ARM) or a third-party solution.

What are the MiFIR trade publication requirements?

The regulation requires European investment firms (IFs) to make public, through an Approved Publication Arrangement (APA), post-trade transparency information in relation to financial instruments which are traded on a Trading Venue or traded over-the-counter (OTC)/off exchange. The obligation only requires one counterparty to report the trade data.

For more information on trade publication requirements, please head to:

What is a trading venue?

Under MiFID II, there are 3 categories of trading venue:

  • Regulated Market
  • Multilateral Trading Facility
  • Organised Trading Facility

Do you know the difference? View our comparison of the three trading venues in this article.

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Further Information

Understanding your reporting obligations and determining whether a third party reporting solution will save you costs and internal resources are important steps towards compliance with your trade and transaction reporting requirements. Choosing a strategic approach to compliance will give you a competitive advantage and ensure you avoid penalties for non-compliance. To make things easy, we’ve created the User Friendly Guide to Transaction Reporting in Europe.

There are a number of reporting regimes including EMIRMiFID II/MiFIRSFTR and Best Execution, all of which affect Investment Firms (IFs) in different ways. Read more to see the regulatory reporting required by IFs.

TRAction has outlined the key differences between MiFIR and EMIR. Our team has also pointed out some of the issues that investment firms need to be aware of under EMIR and MiFIR, so that you can stay compliant with the trade/transaction reporting requirements.

As a delegated reporting service provider, TRAction is asked a lot of questions regarding EMIRMiFIR and SFTR reporting. That’s why our team has put together some of our most frequently asked questions, so that you can learn how to seamlessly report transactions under multiple regimes.

We’ve identified the 3 most common errors in the transaction data we receive from our clients:

  1. Missing customer details
  2. Duplicate transactions
  3. Incorrectly formatted dates


Read more for our guidelines on how to prevent and rectify these errors.

While EMIR and MiFIR trade and transaction reporting rules allow reporting entities to delegate their reporting obligations to a third party, they remain ultimately responsible for ensuring the details of their transactions are reported correctly and accurately under Art 9(1) of EMIR & Art 26(7) of MiFIR. Read more to find out how to check the work quality of your delegate.

As part of MiFIR/UK MiFIR, Investment Firms should have arrangements in place to regularly reconcile their front office transactions against data samples provided by their National Competent Authority (NCA). 

If your NCA does not have samples to provide, as an Investment Firm you should look to reconcile against files that your ARM or Trading Venue has submitted on your behalf, for example, the handback files from your ARM. TRAction outlines why MiFIR Reconciliation is  important and what you need to do.

We all know that meeting all the requisite trade/transaction reporting obligations for EMIR, MiFID II/MiFIR and SFTR can pose a considerable cost to an investment firm. While the regulatory burden is not going to disappear, it can be minimised by outsourcing and choosing the most cost-effective and efficient option for you.

Determining how to make the reports and how to populate these fields is often not a straightforward exercise due to differences in licensing and reporting definitions, as well as certain field criteria being conditional on the input of other fields. TRAction’s considers three of these fields in turn.

Articles 6, 10, 20 and 21 of MiFIR require European Investment Firms (IFs) to make public, through an Approved Publication Arrangement (APA), post-trade transparency information in relation to financial instruments which are traded on a Trading Venue or traded over-the-counter (OTC)/off exchange.

The obligation only requires one counterparty to report the trade data. Read more to find out some common scenarios and which party has the obligation to report post-trade transparency data.

Natural person identifiers are an important part of transaction reporting and contain some complexity in their application due to the variety of identifiers available. 

It’s widely-known that corporate counterparties need to be identified by their legal entity identifier (LEI) in MiFIR transaction reports. This is simple and straight-forward.

Where the counterparties are natural person, the reporting of natural person information including identifiers, names and dates of birth will be required. The type of identifier to be used will depend on the priority given in the Annex II of RTS 22. Find out which natural person identifiers you should use.