Report by ISITC Europe to demystify MIFID II and MIFIR.
On 20th October 2011, the European Commission published two proposals: the revised Markets in Financial Instruments Directive (MiFID II), along with Markets in Financial Investments Regulation (MiFIR). Both the Directive and Regulation aim to establish a safer and more transparent financial system by enhancing regulatory requirements, market transparency and investor protection. This initiative is broken down into three main parts:
- Best execution and surveillance;
- Monitoring and compliance; and
- Regulatory reporting and transparency.
MIFID II/MIFIR sets out a number of reporting obligations in relation to the disclosure of trade data to the public and competent authorities. This replaces the original MiFID reporting requirements, that primarily focused to exchange traded equity instruments. The asset classes within scope of MiFID II include: Equities, FX, Interest Rates (this asset class includes Fixed Income),Credit and Commodities and encompasses multiple contract styles (e.g. swaps, forwards, etc… ) within each asset class.
Given the greater coverage of financial products, more firms will be caught by the reporting obligations. This includes portfolio managers, who can no longer rely on sell side brokers to report on their behalf and under certain circumstances this result in the need for the buy-side to report a trade to an APA.
The report covers the following key sections:
- Timeline – Key Events
- MiFID II for Dummies Panel Session
- Key Roles
- Transaction Reporting
- Data Formats and Validation Rules
- Use of Reference Data Standards