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What institutions are subject to MiFID II?
The Directive shall apply to investment firms, market operators, data reporting services providers, and third-country firms providing investment services or performing investment activities through the establishment of a branch in the Union1.
What is an APA?
An Approved Publication Arrangement means a person authorised under the Directive 2014/65/EU (MiFID II) to provide the service of publishing trade reports on behalf of investment firms pursuant to Articles 20 and 21 of Regulation (EU) No 600/2014.
What institutions are compelled to publish the details of their transactions through an APA?
Investment firms and third-country firms providing investment services or performing investment activities through the establishment of a branch in the Union executing OTC transactions in financial instruments admitted to trading in regulated markets, multilateral trading facilities (MTFs), and organised trading facilities (OTFs).
What instruments are subject to reporting?
Transactions in shares, depositary receipts, ETFs, certificates, bonds, structured finance products, emissions allowances and derivatives and other similar financial instruments traded on a trading venue.
When shall the post-trade information be made public?2
Where the transaction takes place during the daily trading hours of the most relevant trading venue in terms of liquidity, or during the operating hours of the firm reporting the transaction, post-trade information shall be made public as close to real-time as is technically possible and in any case within one (1) minute of the relevant transaction.
Where the transaction takes place outside the daily trading hours of the most relevant trading venue in term of liquidity, or outside normal operation hours of the investment firm, post-trade information shall be made public immediately upon the commencement of the investment firm's daily trading hours and at the latest before the opening of the next trading day of the most relevant market in terms of liquidity.
For fixed income and derivatives instruments, reporting and post-trade information shall be made public as close to real-time as is technically possible and in any case within fifteen (15) minutes of the relevant transaction; this timeframe will be reduced to five (5) minutes from the 1st of January 2020.
For transactions where the underlying is a basket composed of financial instruments, operations corresponding to each instrument of the portfolio shall be submitted individually in case the shall be subject, among others, to deferral (applied by the institution itself or by the APA).
What are the features of BME Regulatory Services’ APA?
BME Regulatory Services’ APA will carry out the reporting and publication in real time of transactions after a comprehensive quality check, the application, if necessary, of waivers for certain transactions as well as the deferral for reporting and publication of transactions large in scale contemplated in MiFID II.
Our service is characterised by:
What is a Systematic Internaliser according to MiFID II?
Systematic internaliser means an investment firm which, on an organised, frequent systematic and substantial basis, deals on own account when executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system3.
Which institutions qualify as Systematic Internaliser?
Any investment firm which, on an organised, frequent systematic and substantial basis, deals on own account when executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system. The frequent and systematic basis shall be measured by the number of OTC trades in the financial instrument carried out by the investment firm on own account when executing client orders. The substantial basis shall be measured either by the size of the OTC trading carried out by the investment firm in relation to the total trading of the investment firm in a specific financial instrument or by the size of the OTC trading carried out by the investment firm in relation to the total trading in the Union in a specific financial instrument. The definition of a systematic internaliser shall apply only where the pre-set limits for a frequent and systematic basis and for a substantial basis are both crossed or where an investment firm chooses to opt-in under the systematic internaliser regime.
What are the quantitative thresholds for the identification of a Systematic Internaliser?
| CRITERIA: THRESHOLDS (past 6 months) | DESCRIPTION | Shares, depositary receipts, ETFs, certificates and other similar financial instruments | Bonds (bonds belonging to a class of bonds issued by the same entity or by any entity within the same group) |
Structured finance products (structured finance products belonging to a class of structured finance products issued by the same entity or by any entity within the same group) |
Derivatives | Emission Allowances |
|---|---|---|---|---|---|---|
| Frequent and systematic basis (there is a liquid market) | Number of OTC transactions carried out by it on own account when executing client orders is equal to or larger than X% of the total number of transactions executed in the Union on any trading venue or OTC. | 0.4% | 2.5% | 4% | 2.5% in the relevant class of derivatives | 4% in the relevant type of emission allowances |
| Minimum frequency on average | Daily | Once a week | Once a week | Once a week | Once a week | |
| Frequent and systematic basis (there is not a liquid market) | Minimum frequency on average | Daily | Once a week | Once a week | Once a week | Once a week |
| Substantial basis | Volume traded by it on own account when executing client orders is equal or larger than X% of the total volumen traded by the investment firm on own account or on behalf of clients and executed on a trading venue or OTC. | 15% (turnover) | 25% (nominal) | 30% (nominal) | 25% (nominal) | 30% (nominal) |
| Volume traded by it on own account when executing client orders is equal or larger than X% of the total volumen traded in the Union on a trading venue or OTC. | 0.4% (turnover) | 1% (nominal) | 2.25% (nominal) | 1% (nominal) | 2.25% (nominal) |
To which obligations are SIs subject?
When a firm qualifies as SI for a given instrument, it is subject to publication of firm quotes for which there is a liquid market; this obligation applies to systematic internalisers when they deal in sizes up to standard market size. SI shall make their quotes public regularly and continuously within the normal operating hours of the trading venue.
Firms shall also notify their Competent Authorities when they reach the thresholds for which they qualify as Systematic Internaliser, and shall also notify ESMA for which financial instruments they are an SI.
What are the features of BME Regulatory Services’ Systematic internaliser Service?
This service will offer compliance with all obligations applicable to SI according to the new regulation; it will also offer:
What is an ARM?
Approved Reporting Mechanism means a person authorised under the Directive 2014/65/EU (MiFID II) to provide the service of reporting details of transactions to competent authorities or to ESMA on behalf of investment firms4.
Which institutions are subject to reporting through an ARM?
The investment firms which execute transactions in financial instruments shall report complete and details of such transactions to the Competent Authority. The report shall be made to the competent authority either by the investment firm itself, an ARM acting on its behalf or by the trading venue through whose system the transaction was completed.
Which financial instruments are subject to reporting?
Operations concluding the acquisition or disposal of a financial instrument, as well as a simultaneous acquisition and disposal of a financial instrument where there is no change in ownership but post-trade publication is required shall be considered transactions subject to reporting.
The obligation shall apply to financial instruments which are admitted to trading or traded on a trading venue or for which a request for admission to trading has been made, financial instruments where the underlying is a financial instrument traded on a trading venue and financial instruments where the underlying is an index or a basket composed of financial instruments traded on a trading venue5.
When shall the post-trade information be reported to the Competent Authority?
As quickly as possible and no later than the close of the following working day6.
What are the features of BME Regulatory Services’ ARM?
Through a single-access point, the information will be gathered and validated according to the new regulation, and will be submitted to the Competent Authority in the approved format.
The system will include features such as the monitoring of received, submitted and rejected transaction reports, the settling of alerts and troubleshooting, manual data entry and access to statistics and data history of communications.
1 MiFID II, art. 1
2 RTS 1, art.14; RTS 2, art.7
3 MiFID II, art.4
4 MiFID II, art.4
5 MiFIR, art 26.
6 MiFIR, art 26.
Through a single-access point, the information will be gathered and validated according to the new regulation, and will be submitted to the Competent Authority in the approved format.
The system will include features such as the monitoring of received, submitted and rejected transaction reports, the settling of alerts and troubleshooting, manual data entry and access to statistics and data history of communications.