a) MiFIR requires investment firms to make public, through an APA, post-trade information in relation to financial instruments traded on a trading venue. When a transaction is executed between an investment firm and a client of the firm that is not an investment firm, the obligation rests only on the investment firm.
However, when a transaction is executed between two MiFID investment firms outside the rules of a trading venue, Article 12(4) of RTS 1 and Article 7(5) of RTS 2 clarify that only the investment firm that sells the financial instrument concerned makes the transaction public trough an APA.
In addition, according to Article 12(5) of RTS 1 and Article 7(6) of RTS 2 if only one of the investment firms is a systematic internaliser in the given financial instrument and it is acting as the buying firm, only that firm should make the transaction public trough an APA.
The following table presents the possible constellations and clarifies who is in charge of making the transaction public via an APA:
According to Article 12(6) of RTS 1 and Article7(7) of RTS 2 two matching trades entered at the same time and for the same price with a single party interposed should be published as a single transaction. Following the general rule, the seller should report the transaction. The party that interposes its own account should not report the trade, except if the seller is not an investment firm. The following table clarifies who is in charge of making the transaction public through an APA:
- Case 1: IF A is interposing its own account with no difference in prices. Trade 1 and 2 should be reported as a single transaction by IF B.
viii.In case of derivative contracts related to commodities, the buyer should be the counterparty that receives the commodity specified in the report and the seller the counterparty delivering this commodity.
ix. In case of forward rate agreements, the buyer should be the counterparty paying the fixed rate and the seller the counterparty receiving the fixed rate.
b) Yes, the investment firm can outsource the reporting of OTC transactions to an APA to a third party. However, the investment firm will remain fully responsible for discharging its obligations under MiFID II/MiFIR. Moreover, in case of outsourcing the reporting of OTC transactions to a third party, the investment firm has to ensure that the third party informs the APA of the transparency regime applicable to the investment firm subject to the reporting obligation. This ensures that the APA is in a position to make the transaction public using the transparency regime applicable to the investment firm subject to the reporting obligation.
Questions and Answers on MiFID II and MiFIR transparency topics, ESMA70-872942901-35
General Q&As on transparency topics
Question 10 [Last update: 14/11/2018]
How should trading venues, APAs and CTPs make data (pre- and/or post-trade data) available free of charge 15 minutes after publication and ensure non-discriminatory access to the information? What practices are not compatible with the requirement to make data available free of charge and ensure non-discriminatory access to the information?
ESMA expects trading venues, APAs and CTPs to make post-trade data, as well as pre-trade data, available free of charge 15 minutes after publication in an easily accessible manner for all potential users using a format that can be easily read, used and copied. This is without prejudice to Q&A 9(b) which allows, in certain cases, to charge fees or other similar restrictions on data. Furthermore, trading venues, APAs and CTPs are required to ensure the non- discriminatory access to pre- and post-trade data, including for data made available free of charge.
Article 14 of RTS 13 requires APAs and CTPs to publish data in a machine readable way. In order to ensure that the information published by APAs and trading venues can be effectively and efficiently used by the public, ESMA expects that trading venues follow similar publication standards and publish data in a machine-readable way. In , APAs, CTPs and trading venues should also provide the data in a format that can be understood by an average reader.
ESMA considers that any practice designed to circumvent the provisions in Article 13(1) of MiFIR and Articles 64(1) and 65(1) and (2) of MiFID II is not compatible with the requirement to make data available free of charge 15 minutes after publication and ensure non- discriminatory access to the information. This includes, but is not limited to, the following practices:
- Imposing restrictions on access to the published data
In order to ensure that all potential users can access the information made available free of charge 15 minutes after publication, trading venues, APAs and CTPs should make clear instructions to the public on their website on how and where to access the data. The post-trade data should be available to anybody free of charge and in a format which can be understood by the average reader.
ESMA considers that publishing information on a website that is not accessible to everybody imposes restrictions on access to the data and does not meet the requirement for making information available free of charge. Similarly, the publication of data through third parties that do not charge specific fees for the relevant data but raise regular, for instance monthly or yearly, fees for subscribing to their services, does not meet the requirement to make information available free of charge. Furthermore, ESMA is of the view that allowing access to the data via a human interface only from ex ante registered IP addresses does not meet the requirement to make information available to the public free of charge. However, such a restriction is acceptable for data provided in a machine readable way.
- Publishing information in a format that prevents users to read, use and copy the information
Trading venues, APAs and CTPs should publish information in an electronic format that can be directly and automatically read by a computer, and that can be accessed, read, used and copied by any potential user through computer software that is free of charge and publicly available.
ESMA does not consider that publishing data as an image (i.e. in such a way that the user cannot copy the data in a format that can be read by a computer) or requiring the purchase of a specific software for downloading, processing or reading the information meets the requirement of making data available free of charge.
- Requiring market participants to submit search queries in order to access data
The data made available free of charge should be published in a similar format as real-time data published on a reasonable commercial basis.
ESMA does not consider that offering only publication arrangements whereby market participants are required to submit search queries in order to access limited portions of the data (e.g. ISIN-by-ISIN searches, limited time periods) meet the requirement of making data available free of charge, but such search queries could exist in addition.
- Deleting data shortly after publication
The data made available free of charge should replicate the information published on a reasonable commercial basis but with a 15 minutes delay. ESMA is of the view that the information should be available for any party to initiate a retrieval of the data for a period of at least 24 hours from the publication. It is not reasonable to have the data available for a period that is not long enough for it to be downloaded reliably either on an ad-hoc or in a repeatable manner
- No publication of post-trade data on transactions benefitting from a deferral
ESMA recalls that the obligation to make available post-trade data free of charge 15 minutes after publication applies also to transactions benefitting from a deferral. ESMA therefore expects that information on those transactions is made available on the same conditions as information on transactions not subject to deferred publication.
Data reporting services providers
Question 1 [Last update: 31/05/2017]
What is the time limit for investment firms to report post-trade information to APAs, in particular should information be delayed in case of deferral? Who decides on the applicable deferral period given the possibility of disagreement between the APA and the investment Firm?
According to Articles 7 and 20 (equity instruments) and 11 and 21 (non-equity instruments) of MiFIR, NCAs may authorise market operators and investment firms to provide for a deferred publication of certain transactions. Since the authorisation for granting the deferred publication is addressed to market operators and investment firms, it is the investment firm’s responsibility to ensure that the APA is informed thereof and publishes the information no later than after the lapse of the deferral.
The investment firm should report the transaction to the APA as soon as technically possible after the execution, regardless of the application of any deferrals. The APA should be in charge of publishing the transaction in due time, according to the deferral period that applies to the specific transaction.
Question 2 [Last update: 31/05/2017]
Who will assign the identifier for the APA?
According to table 3 of Annex I of RTS 1 and table 2 of Annex II of RTS 2, APAs will be identified by either a MIC or a 4-character code. ESMA considers that the best way to ensure a harmonised and unequivocal identification of APAs and trading venues is to provide for a harmonised allocation of the identifier, such as MICs. While there is no legal obligation for APAs to use MICs, ESMA recommends that APAs request the MIC code from the ISO 10383 Registration Authority (SWIFT). The creation, maintenance and deactivation of MICs is free of charge.
Question 2 [Last update: 03/10/2017]
a) Which deferral regime applies to investment firms trading OTC?
b) Is it relevant in what Member State the relevant instrument is traded or admitted to trading on a trading venue?
a) The deferral regime applicable to OTC trades is determined by the deferral regime applicable in the Member State where the investment firm that has to make the transaction public is established. The location of the APA through which a transaction is made public is not relevant. Where it is for an EU branch to make a transaction public, the deferral regime applicable in the Member State where that branch is located should apply.
b) No, for OTC transactions only the deferral regime applicable to the investment firm that has to make a transaction public is relevant.
Questions and Answers on MiFID II and MiFIR market structures topics, ESMA70-872942901-38
Question 19 [Last update: 07/07/2017]
Should a system providing quote streaming and order execution services to multiple SIs be authorised as a multilateral system?
Articles 14(1) and 18(1) of MIFIR require SIs to make public firm quotes, which may be published through an APA. Some prospective APAs propose setting up arrangements which, on top of their APA services, provide a suite of quote streaming and order execution services to SIs and their clients. Clients cannot interact with more than one SI via a single message but can send multiple messages to multiple SIs participating in the service provided.
Article 4(19) of MiFID II defines a multilateral system as” [...] any system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system”. Article 1(7) of MiFID II requires all multilateral systems to operate as either a RM, an MTF or an OTF.
In line with the criteria set out in Q&A 3 on OTFs published on 3 April 2017 for identifying multilateral trading systems, ESMA notes that:
a) If a system allows multiple SIs to send quotes to multiple clients and allows clients to request execution against multiple SIs, then this meets the interaction test foreseen in Article 4(1)(19) even if there is no aggregation across individual SI quote streams;
b) The arrangements described above have the characteristics of a system as they are embedded in an automated facility; and,
c) Those arrangements are not limited to pooling potential buying and selling interests from SIs but also cater for the direct execution of the selected SI quotes. Genuine trade execution would be taking place on the system provided.
Accordingly, a system that provides quote streaming and order execution services for multiple SIs should be considered a multilateral system and would be required to seek authorisation as a regulated market, MTF or OTF in accordance with Article 1(7) of MiFID II.
ESMA reminds that if a firm were to arrange transactions on one system and provide for the execution of the transactions on another system, the disconnection between arranging and executing would not waive the obligation for the firm operating those systems to seek authorisation as a trading venue.