17. Portfolio Manager Reporting

17.1. Transactions involving portfolio managers

All MiFID investment firms are subject to the transaction reporting obligations. However, where a firm is providing a service of portfolio manager on behalf of a client on a discretionary basis they can under certain circumstances rely upon 17.2.2g which obviates the firm from having to submit a transaction report, the so called “portfolio manager’s exemption” or “brokers reliance”.

What conditions have to be met to rely on 17.2.2g?

  1. the transaction must be carried out in providing a portfolio management services for a client. Typically this will be a fund
  2. the portfolio mandate must be discretionary
  3. the counterparty to the trade must be a MiFID investment firm (a check at least annually to confirm the status of the counterparty)

17.2. What transactions fall within the “broker reliance” under 17.2.2g?

The following transactions may fall within the portfolio managers’ exemption:

  • discretionary portfolio management activities;
  • occasional transactions recommended by a portfolio manager to a client which has a discretionary mandate

17.3. What transactions fall outside of 17.2.2g?

Where the broker would not normally make a transaction report:

  • It is a non MiFID broker (as they do not have a transaction reporting obligation)
  • The transaction is in a prescribed market instrument only instrument (e.g. AIM or Plus Market/ISDX security) and the trade was conducted with a MiFID broker but they do not report to the FCA (this is because trades in prescribed market instruments are only reportable by firms or branches report trades to the FCA as prescribed market instrument reporting is super-equivalent to the requirements under MiFID)
  • Where the portfolio manager trades with another portfolio manager (both firms are required to report)
  • Execution only transactions for the client
  • Where the portfolio manager’s broker, as a MiFID firm, passes the order (and the details of the client) to a non MiFID firm for execution. This situation typically arises in respect of overseas (non-EEA instruments) where the broker receives and then transmits the order (RTOs) to another broker normally within its group (see section 5.14. on job-outs and carry/care brokers)