The British Bankers’ Association (BBA) has published a guidance on the short selling requirements in the transaction reporting regime under MiFIR. The BBA explains that MiFIR transaction reporting introduces a number of new requirements, including a new field requiring the completion of a “short sale indicator” for transaction reports requiring firms to indicate whether or not a transaction is a short sale.
The BBA found that although firms are required to identify transactions which are sold short at the time of their execution, this does not necessarily imply the need for a real-time solution, saving firms a significant technical and practical challenge. The BBA details in its guidance a number of different approaches which firms could consider when tackling this issue.
Another issue which was unclear was whether firms needed to identify short sales when acting under exemptions from the Short Selling Regulation, and it found that MIFIR does indeed place a clear obligation on firms to calculate and report short positions even if a firm has an exemption.
The BBA also tackled a number of other issues including the requirement to “determine on a best effort basis the short sales transactions in which its client is the seller”, winding back a trade included in the determination, and how to determine which party should identify the short selling indicator.
View BBA guidance on MiFIR transaction reporting short selling indicator, 20 April 2017