MiFIR transaction reporting requires investment firms that execute transactions in financial instruments to report complete and accurate details of such transactions to a competent authority as quickly as reasonably possible and no later than the close of the following business day.
The transaction reporting obligation in MiFIR transaction reporting includes any financial instruments:
• that are admitted to trading, or traded on, a trading venue or for which a request for admission to trading has been made
• in which the underlying is a financial instrument traded in a trading venue
• in which the underlying is an index or a basket composed of financial instruments traded in a trading venue
Baskets must be reported where at least one of the financial instruments in the basket is traded in a trading venue. Indices must be reported where all components of the index are traded in a trading venue. Whether they are reportable is based on a threshold or where the index is used as the underlying for a financial instrument.
MiFIR requires operators of all trading venues to report transactions traded on their platform (or when executed through their systems) by a party that is not otherwise subject to the regulation.
All investment firms and trading venue operators are subject to the transaction reporting obligation unless they carry out portfolio management and investment advisory services that are outside the mandate provided by the funds they act for as the management firm.
A transaction, according to the MiFIR requirements, is the conclusion of an acquisition or disposal of any financial instrument. This can be summarised as any modification in an investment firm’s position and/or their client’s position that involves a reportable instrument.
Examples for transactions that are not reportable in MiFIR include contracts that occur solely and exclusively as a result of clearing or settlement purposes, post-trade assignments in derivatives, and internal transfers for the same legal entity where beneficial ownership does not change.
The definition of the execution of a transaction for a reporting body involves any of the following:
• the receipt and transmission of orders in relation to one or more financial instruments
• executing orders on behalf of clients
• dealing on their own account
• investment decisions made in accordance with a discretionary mandate given by a client
• transferring financial instruments between accounts
In short MiFIR transaction requires reporting on any action, with very few exceptions, that results in a transaction in a financial instrument.
