November 2017

Last call for MiFID II reporting – Are you ready?

By Nick Moss, Regulatory Reporting Product Manager, Trax

What are some of the challenges associated with meeting MiFID II reporting requirements?

With the expansion of the transaction reporting requirements under MiFID II coupled with the introduction of transparency obligations, one of the fundamental challenges that MiFID II reporting will bring is the substantive increase in data that firms will need to manage internally. Under MiFID II, firms will need to report a minimum 18 data fields via an Approved Publication Arrangement (APA) in near real-time for the trade reporting mandate. The transaction reporting mandate is even more exhaustive, with up 65 data fields required to be sent to your national competent authority either via an Approved Reporting Mechanism (ARM) or by yourself by the close of business on T+1. Firms must ensure they have the reference data to be able to support their various reporting requirements of MiFID II. The challenge is meeting these requirements whilst mitigating risks and operational costs. 

Under MiFID I, a significant number of asset managers qualified for the portfolio manager exemption. This meant that investment managers could rely on a broker to report any in-scope transaction on their behalf to satisfy their reporting obligations. Under MiFID II, that exemption no longer exists, meaning many buy-side firms are entering unfamiliar territory. 

Is it too late for firms to meet the January 3rd deadline for compliance?

No, but firms must act now.  Trax would typically advise that to deliver an on-boarding process that offers firms adequate preparation, including data analysis, integration and testing, will take approximately two or three months, although this is heavily dependent on the complexity of the firm’s business and infrastructure. Given the time remaining this timescale is not always possible, so firms need to look at expediting their build out and where possible leveraging 3rd party solutions that are already in place, such links between OMS vendors and ARMs or APAs.  There’s no mistaking, though, that firms should act now to ensure they are ready to meet their reporting obligations. 

What solutions does Trax have in place to help firms with their reporting obligations?

Trax offers a broad range of regulatory solutions which cover both trade and transaction reporting as a MiFID II approved APA and ARM.  The intelligent design of Trax’s trade and transaction reporting solution helps reduce the technical burden of complying with MiFID II by allowing buy- and sell-side clients to send raw transaction flow to Trax.  The Trax rules-based engine will then translate, filter, enrich and reconcile the data as required to meet regulatory requirements.

The Trax Insight platform provides firms with a single interface, giving them control over their regulatory reporting and transparency activity providing;

  • MiFID II APA and ARM rules engine to help firms meet their trade and transaction reporting obligations

  • MiFID instrument reference data service, to indicate MiFID II eligible instruments in near real-time including links to the ANNA DSB

  • Systematic Internaliser (SI) determination and monitoring 

  • Best execution reporting (RTS 27 & RTS 28)

  • Customisable GUI to monitor and correct reporting 

  • Reference data reporting to NCAs (RTS 23)

  • Data quality analysis and peer benchmarking

  • Commodity position reporting 

Additionally, Trax ensures seamless connectivity and ease of implementation. As part of our extensive preparations for MiFID II, Trax made it a priority to connect to multiple OMSs, including Charles River’s Investment Management Solution and third party connectivity providers, ensuring clients can leverage the connectivity that the OMS has already established to the ARM or APA. 

Having a centralised and secure way of managing Natural Person Data is a key component of meeting your regulatory reporting requirements. MarketAxess and Trax have developed a centralised solution to facilitate the submission of personal data called the European Data Store. The solution provides a database within Trax and MarketAxess where data can be uploaded, maintained and accessed when necessary, letting firms segregate their orders or transaction reports from the submission of natural person data. Ultimately providing the necessary controls around the data and dedicated operational and technical processes to deal with it.

Trax’s dedicated on-boarding team is on hand to help support clients throughout the entire integration process and help them ensure regulatory compliance.