According to Article 26 of MiFIR investment firms which execute transactions in financial instruments shall report complete and accurate details of such transactions to the competent authority as quickly as possible, and no later than the close of the following working day.
The obligation to report transactions shall apply to:
(a) financial instruments which are admitted to trading or traded on an EEA trading venue or for which a request for admission to trading has been made (TOTV);
(b) financial instruments where the underlying is a financial instrument traded on an EEA trading venue (uTOTV); and
(c) financial instruments where the underlying is an index or a basket composed of financial instruments traded on a trading venue.
What constitutes a trading venue?
- Regulated markets
- Multilateral Trading Facilities (MTFs)
- Organised Trading Facilities (OTFs)
These are venues that are authorised by an EU/EEA national competent authority.
To determine if an ISIN is reportable one must check the ISIN or underlying asset’s ISIN against ESMA’s Financial Instruments Reference Data System (FIRDS), a system listing financial instruments traded on EEA markets.
Which derivatives should therefore be reported?
Reportable derivatives include:
- CFDs whose direct underlying consists of shares traded on an EEA authorized trading venue (ToTV);
- Stock Index CFDs whose direct underlying Index contains at least one stock traded on an EEA authorized trading venue (uToTV);
- Any other CFD whose direct underlying consists of financial instruments traded on an EEA authorized trading venue;
How should the Trading Venue field be populated?
For reportable CFDs, the Trading Venue field must be populated with ‘XXXX’ to indicate execution outside an authorized trading venue.
It is important to note that if a firm trades a CFD where the underlying stock is listed on a U.S. market, this does not automatically make the transaction non-reportable. The stock may be also listed on an EEA trading venue, in which case the instrument would be reportable under MiFIR.
