ESMA_QA_1511
Status: ✅ Answer Published
Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1511
Regulatory Context
Regulation : MIFIR
Level 1 Regulation: Markets in Financial Instruments Regulation (MiFIR) Regulation (EU) No 600/2014- MDP
Level 2 Regulation: No information available
Level 3 Regulation: No information available
Topic: * Transaction reporting
Subject Matter: Transaction reporting
Question
Submission Date: 28 September 2020
Consider a scenario where an Investment Firm A executes a reportable transaction through an execution algorithm provided by another Investment Firm B . a) How should field 59 (Execution within firm) of RTS 22 be reported when Investment Firm A uses the execution algorithm provided by Investment Firm B? b) Would Investment Firm A’s reporting differ if Firm B was not a MiFID II Investment Firm and therefore did not have the obligation to report this transaction under Art. 26 MiFIR? c) Where Investment Firm B is using Investment Firm A’s membership to access the market, is Investment Firm B executing the transaction and does Investment Firm B have to transaction report?
ESMA Answer
Answer Date: 28-09-2020
(a) The reporting obligations are the same as where Investment Firm A decides to send an order for execution to Investment Firm B. Investment Firm A should populate field 59 with the person or algorithm identifier within their firm that is primarily responsible for using Investment Firm B’s algorithm. Investment Firm A shall not populate a code for Investment Firm B’s algo, only its own information. The scenario is: IF A → IF B (algorithm) → CCP (Trading Venue or Investment Firm) Assuming that Investment Firm A is buying an instrument and dealing on own account trading capacity, and Investment Firm B is acting in “any other” trading capacity, the respective reports should be completed as follows:
N Field Investment Firm A’s report Investment Firm B’s report
4 Executing entity identification code {LEI} of Investment Firm A {LEI} of Investment Firm B
7 Buyer identification code {LEI} of Investment Firm A {LEI} of Investment Firm A
16 Seller identification code {LEI} of Investment Firm B {LEI} of CCP
29 Trading capacity ‘DEAL’ ‘AOTC’
59 Execution within firm Natural person’s ID or code of algorithm within Investment Firm A Code for Investment Firm B’s execution algorithm
(b) No. Investment Firm A’s reporting is the same as specified in a). (c) Yes. Investment Firm B is conducting the activity of executing a client order according to Art. 3 of RTS 22[1]. The scenario is: IF A → IF B (algorithm) → IF A (membership) → CCP (Trading Venue) Assuming that both Investment Firm A is buying an instrument and dealing on own account, and the subsequent steps in Investment Firm B and A are in “any other” trading capacity, the respective reports should be completed as follows:
N Field IF A’s report 1 IF B’s report IF A’s report 2
4 Executing entity identification code {LEI} of Investment Firm A {LEI} of Investment Firm B {LEI} of Investment Firm A
7 Buyer identification code {LEI} of Investment Firm A {LEI} of Investment Firm A {LEI} of Investment Firm B
16 Seller identification code {LEI} of Investment Firm B {LEI} of Investment Firm A {LEI} of CCP
29 Trading capacity ‘DEAL’ ‘AOTC’ ‘AOTC’
59 Execution within firm Natural person’s ID or code of algorithm within Investment Firm A Code for Investment Firm B’s execution algorithm ‘NORE’
In order to match Investment Firm B’s reports and reflect its involvement in more than one part of ‘the chain’, Investment Firm A has to submit two reports:
one for its trade as a client with Investment Firm B (Report 1). one for its market-side trade with the Central Counterparty or another Investment Firm (Report 2).
[1] Commission Delegated Regulation (EU) 2017/590.
This document was automatically extracted from the ESMA EMIR Q&A database.