ESMA proposes extending MiFIR transaction reporting to management companies providing MiFID services

Context and objectives

The reporting requirements of Regulation No 600/2014 on markets in financial instruments (MiFIR) aimed to provide national competent authorities (NCAs) with a complete picture of the market to support their oversight activities by introducing a uniform and standardized EU-wide reporting regime.

MiFIR applies to investment firms, credit institutions that provide investment services and/or perform investment activities, and market operators that includes any trading venues they operate. Also within the scope of MiFIR are financial counterparties, central clearing counterparties (CCPs) and third-country firms that provide investment services or activities in the EU with or without a branch (following an applicable equivalence decision by the European Commission).

On 24 September 2020, the European Securities and Markets Authority (ESMA) published a Consultation Paper seeking stakeholders’ views on some suggested amendments to the respective MiFIR Level 1 texts. The consultation period ended on 20 November 2020.

On 30 March 2021, based on the consultation feedback received, ESMA published a final report for the European Commission that contained recommendations and possible legislative amendments to the MiFIR transaction reporting regime. ESMA’s recommendations are particularly relevant for trading venues, systematic internalizers, investment firms, data reporting service providers, and asset management companies.
 

Management companies in scope of MiFIR reporting

ESMA’s recommendations are particularly relevant for asset management companies.

Concretely, to ensure a level playing field between MiFID investment firms and AIFM/UCITS management companies, ESMA has proposed to extend the scope of reporting requirements under Article 26 of MiFIR to UCITS and AIFM firms if they provide at least one MiFID service to third parties.

Therefore, the proposed change should only affect AIFM/UCITS management companies providing one or more MiFID services that would trigger the obligation to report transactions under Article 26 of MiFIR. The proposed change will not cover transactions stemming from other activities conducted by AIFM/UCITS firms.
 

Other important amendments

ESMA proposes additional adjustments to the reporting framework that are specifically relevant to trading venues, systematic internalizers, investment firms and data reporting service providers, including:

• The replacement of the trading on a trading venue (TOTV) concept with the systematic internalizer (SI) approach for over-the-counter (OTC) derivatives; 
• The removal of the short sale indicator;
• The alignment with reporting regimes such as the Market Abuse Regulation (MAR), the European Market Infrastructure Regulation (EMIR) and the Benchmark Regulation;
• The reliance on international standards, including legal entity identifiers (LEIs), international securities identification numbers (ISINs) and classification of financial instruments (CFIs); and
• The inclusion of three additional data elements to harmonize the way they are reported and avoid inconsistent and duplicate reporting of the same information at the national level. In particular, these are indicators for:
  • Buyback programs;  
  • Information on MiFID II client categories; and
  • Transactions pertaining to aggregated orders.
     

What is next?

The European Commission is expected to adopt legislative proposals based on these recommendations. ESMA is ready to provide any additional technical advice on the legislative amendments suggested in the report.

What is in it for me?

The inclusion of management companies in the MiFIR transaction reporting regime could mean significant challenges, from IT changes to the cost associated with increased system complexities and potential new MiFID sanctions in case of breach.
 

How can Deloitte help?

Deloitte Solutions is a PSF and Approved Reporting Mechanism (ARM) entity that is regulated by the CSSF and subject to strict IT security and data confidentiality standards. Deloitte’s Transaction Regulatory Reporting services (T2R) are handled in Deloitte Solutions’ environment. Security and confidentiality are the cornerstones of our services—we manage your data from our Luxembourg-based operations under the rigorous rules for PSFs and ARM service providers.

Our team combines regulatory knowledge with smart technological solutions to provide an integrated and tailored solution for your transaction regulatory reporting needs, and is a dedicated and confidential manager of our clients’ transactional reporting from A to Z.

This comprehensive approach makes the Deloitte T2R solution a unique platform in Europe that manages MiFIR reporting in a cost- and resource-efficient manner.

Deloitte’s specialists and dedicated services will help you design and implement your business strategy in light of the future evolution of the regulatory framework and market trends.

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