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Transaction Reporting 

01 December 2011

Impact Amber traffic light Medium impact – some systems changes may be required.

Other areas to consider

Trade reporting; Reporting to clients.

Current MiFID rules

  • All firms that execute trades in relation to a financial instrument that is traded on an EU regulated market are required to report transactions to their home state regulator
  • Firms are required to keep all records prescribed under MiFID for a minimum of 5 years.

MiFID Level 1 Directive Arts: 25(2), 25(3), 25(4), 25(5), 25(6) and 32(7).

MiFID Regulation Arts: 9-16.

FSA rules

SUP 17


Proposed changes
Draft Regulation
Articles 21 - 23

The Commission believes there are specific challenges to be dealt with regarding the scope and functioning of the transaction reporting regime particularly as reporting requirements diverge between Member States, and changes are also required to make the regime consistent with the Market Abuse Directive.

The draft Regulation therefore provides for the following:

Scope of the transaction reporting regime

  • Extend the scope to all transactions in all financial instruments except those whose value does not depend on that of a financial instrument admitted to trading or traded on an MTF or an OTF, or whose value does not correlate to a financial instrument traded on those venues, or is not likely to effect a financial instrument traded on an MTF/OTF.
  • Introduce transaction reporting obligations on RMs, MTFs and OTFs that offer access to firms not authorised as investment firms or credit institutions.
  • Create an obligation on RMs, MTFs and OTFs and on investment firms to store data in a manner accessible to supervisors for at least five years.
  • Amend MiFID to provide that a transaction refers to any agreement concluded with a counterparty to buy or sell one or more financial instruments.
  • Impose an obligation on firms that receive and transmit or otherwise handle orders, but do not execute orders, to transmit the required details of such orders to the receiving investment firm, or report the order themselves.
  • Include means of identifying the person who has made the investment decision and the trader who executes the transaction.  This would require all entities in a chain of transactions to pass on all the details of the trade including the client identifier.
  • ESMA to develop technical standards to allow for the adoption of a common European transaction reporting format and content, including the reporting form, identification of the instrument traded, date and time, price against which the transaction took place, identification of the reporting parties, identification of the client, trading capacity, number of the report, technical format of transmission, and way of transmission.

Reporting channels

  • Third parties reporting on behalf of investment firms should be approved by competent authorities as an Approved Reporting Mechanism (“ARM”), subject to meeting the requirements under MiFID.
  • Deem as satisfied reporting obligations on an investment firm which has already reported an OTC derivative to a competent authority or trade repository under EMIR approved as an ARM under MiFID.
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