The MIFID2/MIFIR regulatory package increased substantially the requirements related to transaction reporting to the Competent Authorities.
MIFID2/MIFIR increased considerably the scope of information (more financial instruments and more data fields) reported to the CAs, amplifying considerably the supervisory powers and, hopefully, leading to better detection and prevention of market abuse.
In terms of data fields, one of the substantial changes is that IFs have now to identify both the account owner and the decision maker of each transaction, including the trader or algorithm responsible for the decision. This means that, even in a transactions that had a few layers of brokers (p.e., client > retail organization > larger broker > member of the exchange > exchange), it became much easier for the CAs to identify: the ultimate beneficial owner and the decision-maker of each transaction.
The changes are also significant from the cost perspective, specially for investment firms, as they are now required to collect and store more data, and produce/sent more and larger reports – which requires more digital storage space, extra man-hours and, in some cases, new software.
In terms of data fields, one of the substantial changes is that IFs have now to identify both the account owner and the decision maker of each transaction, including the trader or algorithm responsible for the decision. This means that, even in a transactions that had a few layers of brokers (p.e., client > retail organization > larger broker > member of the exchange > exchange), it became much easier for the CAs to identify: the ultimate beneficial owner and the decision-maker of each transaction.
The changes are also significant from the cost perspective, specially for investment firms, as they are now required to collect and store more data, and produce/sent more and larger reports – which requires more digital storage space, extra man-hours and, in some cases, new software.
Another significant change is that 3rd parties sending transaction reports to the CAs on behalf of IFs have now to be registered with the CAs as ARMs (Approved Reporting Mechanisms).
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