What is MiFID II Transaction Reporting?
The Markets in Financial Instruments Directive (MiFID) and the Markets in Financial Instruments Regulation (MiFIR) are two pieces of EU legislation used to regulate EU and UK financial markets. MiFID II came into effect on 3 January 2018, replacing MiFID. MiFIR was created alongside MiFID II and became effective on the same date. The goal is to improve the regulatory framework for European financial markets and help regulators detect and prosecute market abuse
MiFID II and MiFIR are complementary to each other and while MiFID sets directives that are then transposed into member state’s law, MiFIR is regulatory so is legally binding in all member states.
The transaction reporting requirements (how firms are expected to report) are detailed in MiFIR’s Regulatory Technical Standards (RTS) 22, Article 15. Complying with these is an onerous task for firms. In part, this is because of the sheer volume of regulation and guidance relating to the reporting requirement. Reports are required for all asset classes and comprise of up to 65 XML fields.
Brexit introduced some slight divergence between the UK and EU requirements, most notably in the reportable instrument set, which also added to the complexity for firms operating in both jurisdictions.