Despite the uncertainty created around Brexit , the foreseeable future is fairly certain : the MiFID II reporting regime is fixed in the EU for implementation at the beginning of 2018 , with changes in the UK ( if any ) not likely until the last half of 2018 .
Therefore , in keeping with the regulator ’ s frequent recommendations , firms should now be planning in earnest to implement new transaction
CHRIS DINGLEY , ABIDE FINANCIAL
MiFID II : Making sure you are prepared
By Chris Dingley , Head of Sales , Abide Financial
reporting processes that will , by any measure , be more taxing than those imposed by EMIR .
Whilst on the surface transaction reporting appears be a simple subject , the difficulties are hidden in the detail , with edge cases accounting for many breaches and internal translation errors leading to inaccurate data being reported .
Within the Level 3 guidance issued by ESMA and the FCA in late 2015 , there is good news with regard to the de-scoping of AIFMs and UCITS from the reporting requirement – the FCA is not proposing to re-implement super-equivalence demanded in MiFID I . However , many hedge funds undertake MiFID business and the increased product scope of MiFIR ( commodities , FX derivatives and many basket trades ) will drag more firms into reporting scope .
For those in reporting scope , MiFIR calls for the capture of personal details and identifiers , such as national insurance numbers for UK citizens , and dealers will be very wary of maintaining this data in their own networks . Firms may also be constrained by the reporting rules themselves : MiFIR envisages that firms who engage only in the receipt and transmission of an order ( RTO ) will not need to report transactions . However , the latest ESMA paper excludes this option for a firm executing in a principal capacity and imposes strict conditions for establishing that RTO has been performed in all other cases .
Once a firm has established its requirement to report , it must then understand the internal impacts of MiFIR reporting ; where a firm conducts MiFID and non-MiFID business , it must be able to ensure that only MiFID eligible trades are reported . This could require extensive work to understand exactly what trades are generated from which book . Furthermore , it is important for market participants to realise that MiFID reporting obligations extend beyond EU / EEA borders . Newer regulation also advances the control requirement imposed on firms . In the case of MiFIR , this is written into the Level 2
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