The European Securities and Markets Authority (ESMA) has published final guidelines on transaction reporting, order recording keeping and clock synchronisation. The guidelines apply to MiFID investment firms, trading venues, approved reporting mechanisms (ARMs) and Member State competent authorities. Specifically the guidelines have been produced on ESMA’s own initiative to promote supervisory convergence following the finalisation of the draft regulatory technical standards on transaction reporting, order record keeping and clock synchronisation (RTS 22, 24 and 25).

In particular the guidelines focus on the construction of transaction reports and of the order data records field by field for various scenarios that can occur. Due to the wide range of potential scenarios, the guidelines do not cover an exhaustive list of all scenarios. However, those subject to the guidelines should apply the elements of the most relevant scenario to construct their records and reports.

The guidelines include:

  • general principles that apply to transaction reporting and order record keeping. They provide high level approaches and further guidance on specific legislative provisions on transaction reporting and order record keeping, e.g. the meaning of transaction, the concepts of “order” and “member or participants of a trading venue;
  • reporting and record keeping scenarios for the various trading scenarios that may occur. In particular, transaction reporting resulting from transmissions of orders, grouped orders, and the provision of direct electronic access (DEA), and order record keeping in the case of central limit order books and request for quotes systems;
  • reporting specific financial instruments: most examples are focused on derivatives given that these financial instruments have a more complex reporting pattern; and
  • clock synchronization clarifications: the guidelines provide further guidance on specific legislative provisions, e.g. the concepts of “reportable events “and “gateway-to-gateway latency”.

In terms of next steps, the guidelines will be supplemented by related technical documents on reporting instructions. In particular, these documents include:

  • the transaction reporting validation rules specifying the criteria of acceptance of transaction reports by the NCAs and conditions under which fields are not applicable and should not be populated; and
  • the XML schemas of the candidate ISO 20022 messages.

These documents are referred to in the guidelines and are expected to be published by the end of October 2016.

View ESMA issues final guidelines on implementation of MiFID II transaction reporting regime, 10 October 2016

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