Transaction reporting

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MiFID 2 Anatomy™

In a Nutshell Section 25:

Template:Nutshell MiFID 2 25 view template

Full wikitext:

Template:MiFID 2 25 view template

MiFID 2: Less fondly known as EU Directive 2014/65/EU (EUR Lex) | MiFID 1Articles: 16(7) (Recording of Communications)

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Trade and transaction reporting in a Nutshell

Trade reporting an obligation imposed by MiFID under Art. 28, is what the broker/dealer reports to the exchange immediately upon execution of the trade, to provide transparency and market information of where the stock is trading.
Transaction reporting is an obligation imposed on investment firms by Art. 25 of MiFID, and is much more detailed account of all transactions undertaken by that firm over the course of a day to the regulator, capturing who is buying and selling what.

Note also Article 9(1) of EMIR requires all counterparties and CCPs to report the details of any derivative contract that they have concluded, as well as any modification or termination of such a contract, to trade repositories.

Transaction reporting of all transactions in financial instruments before the close of business on the day after transaction is imposed on investment firms by Art. 25 of MiFID. A transaction report comprises a set of fields including all descriptive information relating to each trade made by a firm over the course of a period, usually a day. Exemptions do exist for certain classes of trades. Under MiFID the transaction report is made via an approved reporting mechanism (ARM) on a T+1 basis. Under EMIR the transaction report is made to a trade repository, also on a T+1 basis.

Under MiFID FX, commodities and interest rate products are not in scope. Under EMIR FX, commodities, credit, interest rate and equity products are all covered.

In a Nutshell:

  1. Competent authorities must monitor investment firms to ensure that they act honestly, fairly, professionally and act to promote the integrity of the market.
  2. Investment firms must hold for five years' data on all transactions they have handled including full client identification.
  3. Investment firms must report to the competent authority by close of the following working day all transactions in financial instruments admitted to trading on a regulated market, whether or not carried out on a regulated market.
  4. This includes names and quantities of instruments traded, the time and date of execution, price and the investment firm concerned.
  5. Reports must be made by the investment firm, a third party acting on its behalf, or an approved trade reporting system. Where reported by the market or a trade reporting system, the investment firm's obligations may be waived.