MiFID II Reporting, Retail Brokers and Breakfast

Cappitech was excited to be able to host over 60 participants at The Ned Hotel for a MIFID II Reporting breakfast last week. The event included a wide range of compliance and operational professionals from many of London’s retail brokers.

The goal of the event was to provide specific information to brokers on being compliant with the upcoming MiFID II regulation.

Below are some of the topics discussed and accompanying slides.

MiFID II Transaction Reporting

Starting the morning was a presentation from Len Delicaet of TRAX (TRAX is an ARM partner of Cappitech). He covered questions such as:

What do regulators use transaction reporting data? Len explained that regulators take a look at report trades from individual firms and compare trends to similar firms (Slides 3-5). This allows them to find irregularities that could be the result of improper reporting and executions.

                                                                                                                                                         Click image for slides

What products are under scope? (Slides 8-9) A major factor is whether the product or the underlying trades on an EEA trading venue and has an ISIN.

Creating a plan for reporting (Slide 7)

EMIR Level 3

Similar but different than MiFID II, is transaction reporting requirements under EMIR. Representing the CME Group were Jonathan Thursby and Jonathan Tsang who covered upcoming field changes for EMIR Level 3 which goes into effect at the end of October 2017 (Slides 4-6).

Jonathan Thursby then discussed what changes could be next for EMIR (slide 7). For retail brokers, a specific area of interest are Exchange Traded Derivatives (ETDs).

                                           Click image for slides 

Brokers offering ETDs for futures and options may see their reporting obligation removed as it will be covered by CCPs.

MiFID II Challenges for the Forex/CFD Industry

Next up was a presentation from the law firm Tal Ron & Drihem & Co, the co-hosts of the morning. Maayan M. Dana, Stephanie Attias and Tal Itzhak Ron from the law firm covered several MiFID II issues that brokers should be aware of, but not necessarily being discussed. They were:

LEI, no LEI no trading – Basically, brokers of which their clients are eligible to have an LEI, will have to collect it from them. Without it, that client won’t be able to trade with the broker (slides 4-9)

                                                                                            Click image for slides

Decision maker – A new field in MiFID II transaction reporting is ‘decision maker’. If a client trade was initiated by a copy trading or MAM system, they would be the decision maker and their details would be required to be entered in the report (slide 10-11)

Best execution – Explanation of the new requirements of Best Execution that MiFID II brings (Slide 12)

Compliance and technology

Ending the morning was a presentation from Cappitech on our methodology of using technology to automate and handle transaction reporting for MiFID II and other regulatory regions (slides 4-8). A major focus of our is on flexibility of handling data. As such, Cappitech uses a ‘modular’ approach of which we build multiple tables of data sets. This allows us to create robust reference data sets which provides flexibility for manipulating data.

Best Execution Sneak Peak

After explaining some of our processes, we also displayed our coming Best Execution platform for MiFID II. With it, brokers will be able to enter their execution policies and have their client executions compared to benchmark rates.

Overall, we received great feedback from the event. Cappitech thanks everyone who attended, as well as our partners, TRAX and the CME Group for their help.

To learn more about the Best Execution platform and questions about the event topics, blog readers can contact Cappitech here.

About the author: Ron Finberg

Ron is Executive Director, Product Specialist at S&P Global Market Intelligence Cappitech and helps customers with their compliance of EMIR, MIFIR, SFTR, MAS and ASIC derivative reporting. Ron is an ongoing contributor of regulatory focused content and webinars and leverages his over 20 years’ experience in the financial industry. He was also awarded the Editor’s Recognition Award for Best RegTech Vendor Professional in the RegTech Insight Europe Awards 2021.