Published: 7th June 2019

ESMA has updated in Questions and Answers (“Q&As”) on the implementation of investor protection topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR). The updated Q&As provides new answers on best execution and information on costs and charges.

The updates to the Q&As concern:

Best execution

  • Reporting for venues on the ‘trading mode’ according to RTS 27;
  • Reporting for venues and firms on template fields of RTS 27 and 28 if the required content is not applicable to their activities;
  • Reporting on ‘passive’ and ‘aggressive’ orders for firms using quote-driven systems to have client orders executed; and
  • RTS 28 reporting and execution venues.

Information on costs and charges

  • Information on costs and charges: Ex-ante information in case of sell orders;
  • Information on costs and charges: Ex-ante information in case of telephone trading;
  • Information on costs and charges: Use of assumed investment amounts for ex-ante information in relation to investment services and/or products with non-linear charging structures; and
  • Information on costs and charges: Use of ranges and maximum amount/percentages for ex-ante information.

ESMA consults on future reporting guidelines under Securities Financing Transaction Regulation (“SFTR”).

ESMA has opened a public consultation on draft guidelines on how to report securities financing transactions (“SFT”).

The SFTR establishes that both parties to an SFT need to report new, modified or terminated SFTs to a registered or recognised trade repository (TR), including the composition of the collateral.

The Consultation Paper seeks stakeholders’ views on key elements of future ESMA Guidelines on reporting under SFTR. These Guidelines will complement the SFTR technical standards and ensure the consistent implementation of the new SFTR rules. The technical standards on reporting entered into force on 11 April 2019 and the reporting for credit institutions and investment firms will start one year later with a phased-in application for the rest of entities until January 2021.

The guidelines include general principles that apply to SFT reporting, including how the reports should be constructed and where the reports should be sent. The guidelines provide clarity and a harmonised implementation on the following aspects:

  • the number of reportable SFTs
  • the population of reporting fields for different types of SFTs
  • the approach used to link SFT collateral with SFT loans
  • the population of reporting fields for margin data
  • the population of reporting fields for reuse, reinvestment and funding sources data
  • the management by counterparties of feedback from TRs, namely in the case of:
    • rejection of reported data; and
    • reconciliation breaks
  • the provision of access to data to authorities by TRs

ESMA will consider the feedback it receives to this consultation during Q3 2019 and expects to publish a final report on the Guidelines on Reporting under SFTR in Q4 2019.

ESMA updates Q&As on MiFID II and MiFIR Investor Protection and Intermediaries

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