The FCA has published Market Watch 54. In this issue of Market Watch, the FCA focusses on the MiFID II legal entity identifier (LEI) and covers the following topics:

  • LEI – less than 60 days to go;
  • Access to the ESMA instrument reference data;
  • FCA transitional arrangements;
  • Should an operator of a trading venue report transactions executed through its systems by a UK branch of a third country firm;
  • MiFID II and market data obligations; and
  • Authorisations and variation of permissions for MiFID II.

Key points in Market Watch 54 include:

  • firms with transaction reporting obligations must make sure they have an LEI and keep it updated. Firms with transaction reporting obligations are: investment firms authorised under MiFID, credit institutions authorised under CRD IV, operators of a trading venue or a UK branch of a third country investment firm;
  • if a firm is a client of a legal entity or structure, including a company charity or trust, it needs to make arrangements to obtain an LEI code if they want their executing firm to continue to act on its instructions or make a decision to trade on their behalf from 3 January 2018;
  • on 12 January 2018, the FCA is decommissioning its MiFID transaction reporting system, ZEN. The FCA will use its new FCA Market Data Processor (MDP) IT system to meet the new transaction reporting requirements under MiFIR which apply from 3 January 2018;
  • if, between 3 to 12 January 2018, a firm has MiFID transactions that require amendments or cancellation then they should continue to notify the FCA using the online errors and notification form. Firms can also use entities that were approved reporting mechanisms under MiFID, and that will continue to offer the service of submitting MiFID format transaction reports post MiFIR, to submit these amendments or cancellations;
  • operators of trading venues obliged to report under article 26(5) MiFIR should know that SUP 17A.1.2G clarifies that GEN 2.2.22AR has the effect of requiring third country investment firms with a UK branch to comply with the transaction reporting requirements in article 26 of MiFIR and Commission Delegated Regulation (EU) 2017/590 as though they were caught by the article 26 MiFIR requirements. Therefore, as the FCA will receive transaction reports from these firms as if they were MiFID investment firms, operators of trading venues should not report transactions on behalf of these persons. This will avoid the FCA receiving duplicate reports which would give a misleading impression of these firms’ trading activity;
  • the FCA has developed a new Market Data Reporting (MDP) system. It has now made the MDP Industry Test Environment (ITE) available. Entities who want to demonstrate they conform with the FCA’s technical specification and on-board to the MDP system can use the ITE to do so. The MDP on-boarding process and timelines are available on the FCA’s website;
  • any firm that wants to submit data to the MDP system and has not started the MDP on-boarding process should do so now; and
  • any firm that needs new permissions under MiFID II and has not submitted a complete application needs to take immediate action.

View FCA Market Watch issue 54, 7 November 2017