The FCA has published Market Watch 53. In this issue of Market Watch, the FCA focusses on the MiFID II legal entity identifier (LEI). An LEI is a unique identifier for persons that are legal entities or structures including companies, charities and trusts. The obligation for legal entities or structures to have an LEI was endorsed by the G20.

In terms of what firms must do, the FCA notes that:

  • with regard to the MiFID II LEI, firms subject to transaction reporting obligations must have an LEI and keep it updated. To renew an LEI, firms must provide the local operating unit with updated information to verify the data held on the LEI. The requirement to renew the LEI annually applies to firms that are subject to MiFID II and MiFIR transaction reporting obligations and in the UK, under the FCA’s implementation of MiFID II, to UK branches of non-EEA firms when providing investment services and activities. The FCA also reminds clients who are legal entities or structures, including company charities or trusts, to make arrangements to obtain an LEI code if they want firms to continue to act on their instructions or make decisions to trade on their behalf from 3 January 2018 onwards;
  • with regard to MFID II and market data obligations, firms will use the FCA’s market data processor (MDP) to meet their MiFID II market data obligations from 3 January 2018. Firms will submit market data to the MDP as transaction reports, instrument reference data, transparency reports, double volume cap reports and commodity derivative position reports. Firms wanting to become submitting entities need to sign and return a confidentiality agreement, available on the FCA website, to request a copy of the market interface specification (MIS). The MIS lists the technical details required to format and submit market data to the FCA. Once approved, the FCA will issue the MDP on-boarding pack;
  • with regard to the MDP entity portal and the data extract facility, the FCA’s MDP entity portal is already available for the industry test environment (ITE) and will be live from 3 January 2018. From that date, firms will need to use the MDP entity portal to request extracts of transaction reports from the FCA, for the review and reconciliation of the data submitted to it. Firms must have an administrator user account in the MDP ITE entity portal or the MDP production entity portal to request transaction report data extracts. There is a limit of one daily request per firm, regardless of how many users they have. There is also a 10 million record limit when a request is based on a date range;
  • with regard to outsourcing market data, the FCA outlines the different ways that operators of trading venues and investment firms can fulfil their market data reporting obligations; and
  • with regard to the systematic internaliser (SI) and the instrument reference data obligation, the FCA notes that under Article 27(1) of MiFIR, investment firms that are SIs must submit instrument reference data to the FCA for financial instruments falling under the scope of the transaction reporting regime that are traded on its system, other than instruments admitted to trading on a trading venue. Therefore, by reference to Article 26(2) of MiFIR, SIs must submit reference data for financial instruments where the underlying instrument is a financial instrument traded on a trading venue or an index or a basket composed of financial instruments traded on a trading venue.

View FCA Market Watch issue 53, 18 September 2017