MiFID II / MiFIR Transaction Reporting A Practical Guide

Instruments covered
The list of financial instruments covered has been extended
to almost all instruments traded in European markets – with
particular emphasis on the OTC derivatives market that was
previously out of scope for MiFID I.
The only financial instruments that still fall outside MiFIR’s
scope are:
In addition, MiFIR rules have been extended to include non-EUbased
branches of EU firms. These branches will need to submit
transaction reports to the firm’s home state authority.
So the regulations will not only affect the majority of financial
institutions within Europe – a great many outside Europe will be
affected as well.
+ Segregated collateral transfers in bilateral transactions
(though the exact details of this are still being worked out)
+Financing transactions already covered under the Securities
Financing Transaction Regulation (SFTR)
+ Give-ups or give-ins
+The issuance, allotment, subscription or exercise of
pre-emption rights
Trading venues
Under the new regulations, any instrument considered to be
“liquid” must be traded on an approved venue, which can be a
regulated market (RM), multilateral trading facility (MTF), or in the
case of OTC transactions, an organised trading facility (OTF).
There is ongoing debate and controversy as to what exactly
constitutes whether an instrument is “liquid” or “illiquid”.
Under MiFIR, all liquid instruments will have to be traded on an
exchange, and will also be subject to far greater pre- and posttrade
transparency requirements. Whether a particular product is
classified as liquid or illiquid could therefore have a big effect on
market making.
The issue with making this distinction across so many different
instruments is one of the main reasons why the MiFID II and
MiFIR implementation date has been delayed twice from its
original start date of January 2015.
Data fields
The number of data fields required on transaction reports is more
than doubling from 24 to 65. In addition, many of the existing
fields required by MiFID I will be amended to encompass more
complexity and a greater breadth of instruments.
There follows a summary of the reporting requirements, and
some of the internal and third-party systems that firms will
need to source the new data from.
MiFID II / MiFIR Transaction Reporting
A Practical Guide