The second Markets in Financial Instruments Directive (“MiFID II”) and the Markets in Financial Instruments Regulation (“MiFIR”) came into effect on 3 January 2018. MiFID II and MiFIR 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 Fintech provides a full-service MiFIR solution that can simplify your transaction reporting requirements. Contact us if you would like to discuss your transaction reporting obligations.
Transaction Reporting Obligations
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.
Which instruments are caught by the new regulations?
The scope of the MiFIR reporting regime includes:
- financial instruments admitted to trading or traded on an EEA trading venue or for which a request for admission to trading has been made;
- financial instruments where the underlying financial instrument is traded on a trading venue (guidelines state ‘underlying’ means immediate underlying instrument rather than ‘ultimate’ underlying instrument).
- financial instruments where the underlying instrument is an index or a basket composed of financial instruments traded on a trading venue.
MiFID I transaction reporting only applied to financial instruments admitted for trading on a regulated market (and to OTC derivative contracts and other financial instruments linked to those instruments).
Which entities need to report?
MiFIR 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 information needs to be reported?
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.
Where should reports be made?
Firms can report directly to their National Competent Authority (“NCA”), or indirectly through an Approved Reporting Mechanism (“ARM”) or a third-party assisted reporting solution.
If you would like assistance in understanding MiFIR transaction reporting obligations and how we can help you simplify your reporting, please contact us on +44 20 8050 1317 in the UK or +357 25 123 309 in Cyprus.