A month into MiFID II Transaction Reporting (MiFIR), what we’ve learned

MiFID II has now been live for a little more than a month in Europe. At Cappitech, we wanted to share our experiences of complying with the Transaction Reporting requirements that are under the MiFIR framework of MiFID II legislature.

As a technology provider focused on transaction reporting, Cappitech has been involved with helping numerous types of firms such as asset managers, banks, brokers and prop trading firms create and submit their reports. This has allowed us to gain a unique perspective of working with multiple financial regulators, financial investment types and asset classes.


UAT vs Production

Questions ImageWhen MiFID II went live on January 3rd, the first major hurdle was the move from test (UAT) to production environments. This wasn’t just Cappitech moving our clients trade files to production, but was happening across the industry. Included was our partner ARM, Trax Markets, National Competent Authorities (NCAs) and client data extraction systems.
Lots of new questions

Prior to the migration in December, compliance personnel shared their stories of the NCA reporting technology shutting down a few hours into MiFID I going live in 2007. Similarly, in 2014 Trade Repositories saw outages when EMIR went live. In addition, the November 2017 EMIR update triggered submission delays at various Trade Repositories.

With that backdrop, MiFID II was expected to have its teething issues as well and this turned out to be the case.


Some of the issues faced:

  • Production overloads: Probably the biggest difference between testing and live is the amount of data being processed. While a firm may only test submissions of a handful of trades to ensure their reports are in the correct format, production reports are much longer. Also, firms may not be test every day. The result is that NCA submission technology suddenly had to handle larger and more reports in the live environments. This has triggered outages as well as long delays of feedback for report processing.
  • New errors: One of the hardest issues to handle was new errors that suddenly occured. As such, while test reports were submitted and receiving positive feedback, NCAs and ARMs suddenly triggered new rejection messages that weren’t in test environments. This in turn became a mess to troubleshoot as it meant understanding whether there was an error in MiFID II Transaction Reports Cappitech was submitting, a bug in the ARM or NCAs live environment or the ARM and NCAs added new rules to their live environment. For Cappitech, this meant reviewing test and live reports for discrepencies as well as working closely with TRAX to review rejection messages.


ISIN generation

When submitting a transaction report, the product requires an ISIN code to identify it. For listed products this is fairly straightforward. However, derivatives don’t always have their own ISIN and use the ISIN of the underlying product. For OTC derivatives, gathering the correct ISIN is a difficult process as there are often hundreds of similar products to choose from to pick the correct ISIN.

Also, many products didn’t have ISINs created for them until January 3rd. Specifically, this made it difficult to test many CFD products in the UAT environment last year. As a result, much of the ISIN troubleshooting that the financial industry hoped to accomplish in 2017 was pushed to 2018 as MiFID II went live.


NCA feedback delays

Danger signWith clients across Europe such as from Germany, the UK, Italy, Cyprus, Ireland and Malta, Cappitech has gained exposure to the processes of many NCAs. Although they all are under the same guidelines from ESMA, some country regulators have been much better than others with building their technology to handle report submissions.

A specific issue is that multiple NCAs have had delays when sending back rejection feedback of submitted reports. A few have acknowledged problems with their technology and that investment firms should continue to send reports but feedback from processing won’t be available till the end of Q1.

Even among NCAs that are processing MIFID II reports, feedback is often send back a day or two later. This has made it more difficult to discover, let alone fix reports with errors.



When it comes to submitting a MiFID II transaction report, ESMA allows investment firms to send them to an ARM or directly to an NCA. When submitting to an ARM, they go ahead and share it with a firm’s NCA. Either way, the final report makes it way to the NCA.

Working with TRAX to educate investment firms about MIFID II last year
When evaluating how best to process client reports; through an ARM or directly to NCAs, Cappitech decided with using the ARM approach for the launch of MiFID II. As we had a working relationship with TRAX under MiFID I, we continued that partnership for MiFID II.
Working with TRAX to educate investment
firms about MIFID II last year

So far, we believe we made the correct decision. While there advantages and disadvantages to either method, working with an ARM has been a benefit for Cappitech and our clients. Some of the benefits include:

  • Single submission format for sending files to multiple NCAs. This allowed us to unify the trade information we collect from clients regardless of which underlying NCA they are regulated under. This resulted in quicker troubleshooting of rejection messages, more efficient onboarding of customers and simpler consumption and transmission of NCA messages across all of our clients.
  • Security – With MiFID II requiring the inclusion of personal details of clients and internal trades and portfolio managers, we wanted a secure method for that information to be uploaded and processed. Partnering with TRAX allowed us to leverage a solution for our clients used by some of the largest investment firms in the world such as Goldman Sachs and Blackrock.
  • Best practices – Working with an ARM allowed us to discuss with them best practice reporting structures being used across the industry. This was important when deciding how to interpret some of the ambiguous reporting requirements under MiFIR.


More work to do

Last but not least, we’ve learned that MiFID II compliance is a work in progress. Unlike MiFID I or EMIR, MiFID II has new issues that Cappitech, our partners and clients have only encountered once going into live production reporting. This has forced us to be dynamic in adjusting our workflow to adjust to changes required for reports.

While the initial first month rush has been focused on getting clients reporting and fixing connectivity issues, our next phase is reviewing report quality. This includes reviewing regulatory messages from NCAs that have been slow to provide feedback. Also, as mentioned above ISIN generation has been a problem across the industry, and Cappitech constantly reviews ESMAs list of millions of ISINs for updates on what are the best instrument codes we should use for our customers.

Next steps are also adding connectivity to new ARMs and direct submissions to NCAs. Like our file-agnostic approach for consuming trade data from clients, Cappitech believes in providing as many submission choices as possible to best serve our clients.

If your firm or partners are still struggling with MiFID II compliance, Cappitech know how we can help Contact Us


Trudy Namer
About the author: Trudy Namer
As Executive Director, Marketing at S&P Global Market Intelligence Cappitech, Trudy leads the global marketing strategy for Cappitech. Capitalizing on over 15 years of B2B and financial services marketing experience, Trudy specializes in all aspects of marketing including branding, lead generation, digital marketing, public relations, thought leadership positioning and content creation. Trudy holds a Business of Commerce degree (Cum Laude) from the University of South Africa and a Master of Business Administration (MBA) from Bar Ilan University, Israel.