To comply with MiFID II’s reporting rules, buy-side firms will need to complete transaction reports containing up to 65 fields. How can they manage their reference data to meet the challenge?
Record keeping and transaction reporting rules have been in place since MiFID I, but the scope is now increasing both in terms of the types of instruments covered and the amount of information required in each report.
Going beyond equities, MiFID II will now cover virtually any OTC financial instrument.
In addition, buy-side firms have to provide these reports within a very limited timeframe.
Specifically, they must report transactions by the close of the following work day to either their local regulator or Approved Reporting Mechanism.
How much information is required for MiFID II?
In the MiFID II world, a transaction report can contain up to 65 fields.
This will extend to:
- Any financial instrument which has traded or has been admitted to trading on a Trading Venue (not just regulated markets as dictated by MiFID I).
- Instruments that have had a request for admission to trade on a Trading Venue.
- Where there’s an underlying instrument or basket/index of instruments traded on a Trading Venue.
- New flags, detailing particular trade types in certain instruments.
- Specific details of participants, including the Legal Entity Identifier (LEI code) of counterparties, funds and individual accounts.
- Significant additional personal details (National ID/ passport numbers) of the individual persons involved in both the investment and execution decision.
It’s worth mentioning that the stakes for not properly reporting and recording transactions are high.
There have already been well publicized fines for under reporting under MiFID I and there is no indication that regulatory scrutiny will ease any time soon.
How to maintain extensive reference data
MiFID II greatly increases the need for extensive reference data.
Essentially, you are required to create a record of every order, execution and transaction event. In addition, you need to determine what needs to be reported and then generate the data to comply with the new rules.
This is why so many firms are turning to us for help with:
- Identifying the instruments MiFID II covers.
- Providing the data needed to assure compliance for every transaction, every instrument, every time.
Leading source of reference data
As a leader in providing financial reference data, including to many investment firms, we ensure that accessing these regulatory data points will be straight-forward to integrate into their workflow.
DataScope Select is the primary service for instrument reference and pricing data, and much of this information will also be included within the real-time data feeds from Elektron and available on the Eikon desktop.
In addition, Entity Risk is a respected and leading source for verifying client identity.
This solution leverages the most complete and comprehensive data sources available for understanding complex corporate structures.
With over 100 legal entity attributes, including LEI and organization type, this data can be delivered through multiple channels including DataScope, web service APIs or FTP servers.
Part of the daily routine
We can also provide a transactional store using Velocity Analytics and from this, stage both the data required for Transaction Reporting and Best Execution reporting.
Furthermore, using standard or custom analytics combined with Elektron Real Time or Tick History data, you can provide benchmark analytics for proving other typical business analytics, such as RFQ hit rates.
MiFID II brings a daunting new challenge of reporting a great deal more instruments and information than was required under MiFID I.
However, working with us and our platforms will make a streamlined report part of the daily routine.