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MiFIR Transaction Reporting – Taming the Beast

Adem Sabah, Product Manager DTCC

LinkedIn profiel

Finally got to grips with trade reporting under EMIR? No? Well hang on, because here comes a new reporting regime. MiFIR, the pan-European regulation, accompanies the recast Markets in Financial Instruments Directive (“MiFID II”) and includes obligations for transaction reporting. Unlike other trade reporting regimes currently in place (such as EMIR) which seek to monitor systemic risk, MiFIR serves to facilitate market surveillance and detect market abuse. As such, MiFIR is concerned with the event of execution – the ‘by whom’, ‘for whom’, ‘what’, ‘when’ and ‘why’ that results in an event of execution.

Basically, everything

MiFIR greatly increases the scope of the reporting regime under MiFID I to cover both cash and derivative products executed by all MiFID Investment Firms. Make no mistake, the product scope is very broad – almost everything except securities financing transactions (SFTRs). No, that is not an oversight, there is a separate reporting regime for SFTRs coming into force later in 2018. Both of these requirements come on top of substantial changes to the current EMIR reporting regime, expected to come into force shortly before MiFIR.

Transparent complexity

MiFIR introduces numerous challenges for the market through (amongst others) the obligation to report personal data of individuals involved in a transaction as well as mandating the use of ISINs to classify financial instruments. As an industry, these represent complex and paradigm shifting changes.

In search of the silver bullet

After granting a delay of 1 year, there seems to be very little regulatory appetite for non-compliance when the obligations come into effect on 3rd January 2018. Whilst the industry grapples with the cost and complexity of these deliverables, increasingly firms are looking to market utilities to provide cost effective community solutions. Unfortunately, there is no panacea. However, if EMIR has taught us anything it is that we have the capacity to surmount these issues through closer integration and centralization of solutions but we must do so today. As the old adage says, ‘failure to plan is a plan to fail‘.

 

About the author:

Adem Sabah is a Product Manager at DTCC and has been working with the industry to deliver clients a cost-effective solution for transaction reporting under MiFIR.
Mr. Sabah is speaker at the IIR MiFID II conference, held in Amsterdam on the 15th and 16th of November 2016.

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