MiFIR Enriched and Delegated Transaction Reporting for EEA Investment Firms

A new Directive 2014/65/EC (“MiFID II”) and Regulation (EU) No 600/2014 (“MiFIR”) have introduced new requirements for the reporting of transactions executed by EEA Investment Firms in financial instruments covered by MiFID II. (“MiFIR Transaction Reporting”)

Who is Subject to the MiFIR Transaction Reporting Requirements?
All European Economic Area (“EEA”) Investment Firms are subject to the new requirements and will have to report all transactions executed in financial instruments covered by MiFIR within one working day from their execution.

Interactive Brokers (U.K.) Limited (“IBUK”) will offer assistance to all Interactive Brokers Group (“IB”) clients that are EEA Investment Firms in complying with the new requirements.

With the exception of Omnibus Introducing Brokers that utilise the IB platform (in which all their underlying client positions are held in one or more omnibus accounts), all IB clients that are EEA Investment Firms will be able to elect to have IBUK report on their behalf. IBUK will report for IB clients based on two distinct reporting mechanisms implemented in accordance with the Regulation: Enriched Transaction Reporting and Delegated Transaction Reporting.

 

ENRICHED TRANSACTION REPORTING
In compliance with Article 4 of Commission Delegated Regulation (EU) 2017/590, if IBUK includes details of orders submitted by clients that are EEA Investment Firms (“the transmitting firm”) in its own transaction reports, the transmitting firm is exempt from reporting these transactions.

Enriched Transaction Reporting will only apply to transactions in financial instruments carried by IBUK submitted for execution by an EEA Investment Firm for the benefit of the Investment Firm’s clients (for example, a Financial Advisor, Fund Manager or Introducing Broker Account submitting orders for its clients' subaccounts).

 

DELEGATED TRANSACTION REPORTING
Delegated Transaction Reporting services are provided by IBUK to EEA Investment Firms for all other transactions submitted by the Investment Firm.

This includes transactions entered by the Investment Firm for its own proprietary account, transactions submitted on the basis of discretionary mandates given by their clients and transactions in Financial Instruments for which IB UK is not the carrying broker (i.e., any transaction in a financial instrument where another IB affiliate is the carrying broker). Delegated transaction reporting does not apply where the trades are submitted directly by clients of the Investment Firm.

These reports will be submitted to the National Competent Authority (“NCA”) of the Country of legal residence recorded in the Legal Entity Identifier of the account for which the Delegated Transaction Reporting was enabled (e.g., if the Investment Firm’s legal residence is Netherlands, transactions will be reported to the Authority for the Financial Markets (AFM)).

Clients will only need to sign one agreement with IBUK to cover both Enriched and Delegated Transaction Reporting.


How to Sign Up for the Enriched and Delegated Transaction Reporting Service
EEA Investment Firms (other than Omnibus Introducing Brokers) will be prompted to complete an electronic form in the Account Management system during which it will be possible to accept to use IB’s Enriched and Delegated Transaction Reporting Service.

EEA Investment Firms that are Omnibus Introducing Brokers on the IB platform will not have the ability to activate the Enriched and Delegated Transaction Reporting.

EEA Investment Firms that utilise IB’s Enriched and Delegated Transaction Reporting Service will need to sign the relevant legal agreement and provide the following information:

  • Legal Entity Identifier (“LEI”). Clients that do not have an LEI, will be able to apply for one through IBUK;
  • The citizenship(s) for each authorised trader and further information as required by the national client identifier requirements for the relevant country;
  • Individuals or Algorithms that can be responsible for making the investment decision within the investment firm:
    1. Individual active traders who have been previously selected as possible investment decision makers within the firm. Only individuals that are authorised as traders on the account will be allowed;
    2. Algorithm identifiers provided for algorithms that the firm may use for making investment decisions. It is the client’s responsibility to determine and provide algorithm identifiers in compliance with the regulation.

How the New Requirements Will Affect the Account Management and the IB Order Entry System
Some of the information required for the submission of a transaction report may change on an order by order basis, and may require input of the person submitting the trade. Hence, IB has amended IB Account Management and the IB Order Entry System to allow traders to provide the necessary information.

Accounts that want to use IB’s Enriched and Delegated Transaction Reporting Service shall select the authorised traders, and list the Algorithm IDs that may be responsible for making an investment decision.

The traders and algorithms listed in Account Management will be displayed in a new dropdown field of the IB Trader Workstation at the time of the order submission. This field will show the default value selected in Account Management of the account. The client will be able to change this by selecting another value present in the dropdown list.

The IB Trader Workstation will allow an authorised trader on the account for which the Enriched and Delegated Transaction Reporting was activated to select one person or algorithm as responsible for the investment decision within the firm with regard to the specific order submitted.

 Note: For a listing of common MiFIR definitions and terms, see KB2980

 

THIS INFORMATION IS GUIDANCE FOR INTERACTIVE BROKERS CLEARED CLIENTS THAT ARE INVESTMENT FIRMS ONLY. THIS GUIDANCE DOES NOT APPLY TO EXECUTION ONLY ACCOUNTS.

NOTE: THE INFORMATION ABOVE IS NOT INTENDED TO BE A COMPREHENSIVE OR EXHAUSTIVE GUIDANCE AND IT IS NOT A DEFINITIVE INTERPRETATION OF THE REGULATION, BUT A SUMMARY OF MiFIR TRANSACTION REPORTING OBLIGATIONS.