There have been many developments in national and European financial markets regulation during the past month. Among other things, the ESMA has issued instructions and guidelines regarding transaction reporting under MiFID II / MiFIR. In this article we provide a brief overview of these and other developments.

ESMA instructions and guidelines on MiFID II / MiFIR reporting

On 10 October 2016, the ESMA published final guidelines on the implementation of the transaction reporting regime under the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR), and a final report setting out the consultation feedback ESMA received about the implementation.

The guidelines specify how to implement transaction reporting, order recordkeeping and clock synchronisation requirements. The regulatory technical standards (RTS) on the reporting of transactions to competent authorities are still being scrutinised by the European Parliament and Council, so it is possible that these RTS may be amended later on.

The guidelines aim to support investment firms, trading venues and approved reporting mechanisms in anticipating their reporting, and order recordkeeping obligations coming into effect in 2018, and to ensure consistency in the application of these obligations across member states. They provide examples of transaction reports and order data records. Each example is accompanied by sample xml-messages to be used to represent the expected reportable values.

The guidelines include:

  • general principles to apply to transaction reporting and order record keeping; they provide high-level approaches and further guidance on specific legislative provisions on transaction reporting and order record keeping, for example, the meaning of "transaction" and the concepts of "order" and "member or participants of a Trading Venue";
  • reporting and recordkeeping scenarios for the various trading that may occur, in particular: transaction reporting resulting from transmissions of orders, grouped orders, and the provision of direct electronic access as well as order record keeping in the case of central limit order books and request for quotes systems;
  • reporting specific financial instruments: most examples are focused on derivatives given that these financial instruments have a more complex reporting pattern;
  • clock synchronisation clarifications: the guidelines provide further guidance on specific legislative provisions, for example, the concepts of "reportable events" and "gateway-to-gateway latency".

In addition to the guidelines, the ESMA published detailed reporting instructions and xml schedules under its Financial Instruments Reference Data System (FIRDS) on 27 October 2016. The FIRDS covers the MiFIR and the Market Abuse Regulation (MAR) requirements for reference data collection and publication, collection and processing of additional data to support the MiFIR transparency regime and suspensions coordination. The ESMA has published the following instructions:

This document provides instructions for the reporting entities when submitting the double volume cap data to the ESMA system for processing. The document is relevant for NCASs, trading venues and consolidated tape providers. These entities are required to implement system interfaces to submit data allowing the ESMA system to calculate and publish the volume cap data.

This document specifies the reporting instructions for the provision of data necessary to support the MiFIR transparency regime. It sets out the characteristics of information required for the uploading interface between trading venue or NCAS systems and the FIRDS for transparency. The document is relevant for NCAS, trading venues, approved publication arrangements and consolidated tape providers that will implement system interfaces for the provision of data to the FIRDS transparency system.

This document describes the elements of the interface that has to be built between NCAS and market participants to enable a common specification for transaction reporting between competent authorities and reporting entities in their member states. It sets out a common technical format for transaction reporting and common set of data quality rules; and

This document specifies the exchange of reference data information between NCAS, trading venues, systematic internalisers and the FIRDS.

The reporting instructions define everything that trading venues, systematic internalisers and competent authorities should know in order to report instruments reference data to FIRDS, and all information for NCAS, trading venues, systematic internalisers, approved publication arrangements and consolidated tape providers to report non-working days to FIRDS.

Market Abuse Regulation – ESMA publications

ESMA has updated its Questions and Answers on the implementation of the Market Abuse Regulation. The Q&A's now include five new questions relating to:

  • managers' transactions; and
  • investment recommendation and information recommending or suggesting an investment strategy

ESMA has also published translations of:

  • MAR guidelines on persons receiving market sounding
  • MAR guidelines on the delay in the disclosure of inside information.

The guidelines are now available in the 22 official languages of the European Union.

EBA consults on guidelines for internal governance of credit institutions and investment firms
The European Banking Association (EBA) has published draft guidelines on internal governance. The draft guidelines specify the internal governance arrangements, processes and mechanisms that credit institutions and investment firms must implement in accordance with the Capital Requirements Directive. They update the existing set of guidelines on internal governance. Additional guidance has been included to increase the transparency of institutions' offshore activities and the consideration of risks within their change processes.

The consultation runs until 28 January 2017. The existing guidelines on internal governance will be repealed when the revised guidelines enter into force.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.