On the back of the Assisted Reporting webinar on the 31st of May the TRADEcho team have put together this Q&A to answer firms' MiFID II Assisted Reporting questions.
If any areas are unclear please contact the TRADEcho team.
What is the case for Assisted Reporting for Investment Firms vs Non-Investment Firm. E.g. Corporates?
Non-MiFID firms, retail and corporate customers are not obliged to publish trades under MiFID II, thus there is no case for Assisted Reporting. However, all MiFID II Investment Firms will be obligated to publish trades under MiFID II making a strong case for Assisted Reporting.
What is TRADEcho’s current setup with different OMS providers? Is TRADEcho already in contact with market leaders about how and in which form it will need to receive the life-data of the trades?
TRADEcho already facilitate trade reporting via the major OMS firms that cover both buy and sell-side customers.
Where a client has an agreement with another APA (not TRADEcho) and the report needs to be forwarded, does the identity of the APA need to be identified in the report or will TRADEcho maintain a list and determine where it needs to forwarded to?
The identity of the APA the trade details should to be forwarded to needs to be given to TRADEcho. TRADEcho will not have access to a firms' client list. The identity of the APA can be set on the FIX message or via the TRADEcho portal.
What is the difference between Delegated Reporting and Assisted Reporting?
Delegated Reporting and Assisted Reporting is in essence the same thing, and people generally use these definitions interchangeably. Delegated Reporting is a term used for MiFID. However, TRADEcho is of the belief that Assisted Reporting is a more accurate description for MiFID II since firms cannot delegate or outsource the reporting obligation or liability. Under MiFID II firms can only outsource the operational process or trade reporting, allowing a broker to assist or facilitate trade publication on your behalf- Assisted Reporting.
With new Venues being created more stocks will be dual listed. How will TRADEcho identify which stocks are dual listed?
TRADEcho will identify dual listed stocks by their ISIN and further granularity can be provided to identify the line in the FIX message. For OTC and SI trades the platform the product is listed on is largely irrelevant for reporting.
How does TRADEcho determine SI status per instrument for all counterparties?
TRADEcho will have regular and direct interaction with all relevant national regulators to collect this information and keep it up to date.
How will Assisted Reporting on behalf of a client’s work? Will the client have send two messages? What happens if the broker is using TRADEcho but the client is using another APA?
The broker would set up a rule within the SRR (in the portal) to confirm that they are reporting on behalf of the client in question. In the portal the broker will configure the APA of the client’s choice which can be set per asset class and sub-asset class if desired.
When publishing trades on behalf of a client the broker will send one message containing the trade details, the Assisted Reporting flag and the counterparty in question. TRADEcho then does the rest.
Do you offer reference data as part of your service offering? If yes, what’s the frequency? Daily, end of day or real time?
All London Stock Exchange Group’s MiFIR/MiFID II reporting services are complemented by a large suite of reference data provided by UnaVista. Firms can use one connection into the LSEG to use both TRADEcho and UnaVista. One connection, one contract, one point of contact. For more information about UnaVista’s reference data services please contact a UnaVista representative. http://www.lseg.com/unavista | +44 (0)20 7797 1214.
If a client wishes to trade report to another APA, does the broker supplying the Assisted Reporting need to have a relationship with the client's APA of choice?
No, the broker does not need an agreement with the third-party APA, but the client who has the reporting obligation needs such an agreement.
In TRADEcho’s Assisted Reporting model the broker is providing a service to the client e.g. submitting data via an 'assisted report' to TRADEcho’s SRR/APA. If a broker is paying for the APA service would this be considered an inducement? How are TRADEcho clients confident that this does not constitute as an inducement?
TRADEcho’s default Assisted Reporting solution is configured so that the broker does not pay for the APA service. TRADEcho will have a contract in place with the end client, charging them directly, thus the Assisted Reporting does not constitute as an inducement.
If the broker does pay for the APA for the client, the client and the broker need to agree the value of the service and how the broker is paid for it to eliminate any potential question of inducement.
What is the fee structure if the broker uses TRADEcho but the client opts for another APA? Does the client need to pay for both APAs?
The broker must pay for TRADEcho’s APA service for their own internal trade publication, and the SRR service to enable Assisted Reporting. The broker does not have to pay for the client’s APA.
The client will have a contract with their APA of choice and will be billed directly for trade publication.
Will the submitter get real-time notifications of successfully reported trades/rejection? How would this work in the double-APA scenario
TRADEcho will notify the broker of any rejects from the clients APA via the SRR service. TRADEcho are in the process of mapping the other APA's specs which will be added into the specs shortly.
“Reporting option 1: Outsource service to the counterparties they trade with who report under the counterparty’s APA agreement.” How is this a viable option if it does not fulfil the regulatory obligation?
In the instance when the broker is not covered by MiFID II, e.g. based outside of Europe, this is clearly not a viable option. Ergo, if an Investment Firm trades Ex-Europe from Europe there is a likely requirement to connect to an APA directly.
As a buy-side firm we must ensure that all are brokers are connected to an APA. With the SRR service it will not matter which APA that broker has connected to, is this correct?
As a sell-side firm, it should not matter which APA the buy-side firm is contracted with as the SRR will send them the buy-side firm’s trade details. Therefore, the only priority is for buy-side firms to should suggest their brokers use the TRADEcho SRR service to ensure full coverage of every asset class in their Assisted Reporting solution.
How can we ensure that the brokers published the Assisted Report for the buy-side client in line with the regulatory timeframes (within 15-minute for non-equity and within 1 minute for equity and equity like)? Where does liability lie if the broker is not able to send the Assisted Report to the APA in time?
The reporting obligation cannot be outsourced and the liability remains firmly with the buy-side client. However, clients can monitor all reports submitted on their behalf in real time on the TRADEcho portal. The portal acts as an exception management tool and allows firms to view and manage late submissions, rejections and deferrals.
Who is trade reporting "on the behalf of " the buy-side? Is it the broker or TRADEcho?
While the broker is publishing a trade on behalf of the buy-side, the buy-side client is the counterparty reporting the trade which is done via TRADEcho. The obligation to report trades cannot be outsourced by the client.
Fees are charged to Investment firm (i.e. buy side, not the broker). Are there any extra charges for sell-side firms?
This is correct regarding the buy-side as they will be charged for published reports. The broker/sell-side/facilitator of the Assisted Reporting will pay per their existing contracted fee structure. There is no additional cost to facilitate Assisted Reporting for the sell-side/broker.
In regards to the TRADEcho portal, how does the benchmarking work?
Once TRADEcho has culminated enough data benchmarking will be made available to allow firms to compare their trade reporting stats to other firms. This will allow firms to for example gain insight in the percentage rejects or late reports compared to other firms. This will be anonymous.
What is the fee structure for the buy-side?
TRADEcho pricing is tiered based on the monthly volume of published trades.
Is crossing stock below the LIS threshold reported on-exchange?
This depending on where it's executed. If it is executed on-exchange yes, otherwise no.
It can be reported on-exchange if the participant is a member of the London Stock Exchange which is facilitated by TRADEcho.
What are the costs when a trade is sent to another APA?
The pricing associated with publishing trades to another APA is determined solely by the end APA and incurred by the client.
Are buy-side firms obligated to report at fill level with the trade reports for all asset classes?
Yes. For example, in the case of an ETF that is made up of hundreds of fills, you must report every fill.
Does the buy-side client need a contract with TRADEcho APA or SRR if they want a broker to assist them in the reporting?
The client will need a contract with TRADEcho’s APA or another APA of the client’s choice. The client does not need a contract with TRADEcho’s SRR. The broker on the other hand needs a contract with TRADEcho’s SRR service to facilitate Assisted Reporting.
If Trade and Transaction Reports are not at the same level and no 1-for-1 mapping, how would one apply the post-trade reporting indicators on the Transaction report?
If clients are using both TRADEcho and UnaVista, a unique trade/transaction ID (bespoke for each client) will link the trades and enrich the post-trade indicator.
To facilitate Assisted Reporting do brokers require any additional information from the client other than the client LEI?
No, TRADEcho just requires the client LEI and any specific identifiers other APA’s may require to identify the client.#
If the client is using TRADEcho’s APA we require a contract with the client. The broker would also require a contract with TRADEcho for the SRR service to facilitate Assisted Reporting on behalf of clients.
What types of reports are available brokers and clients detailing metrics for trades submitted? Are reports only available through the portal or can they be sent directly to the participant?
The following reports will be available for brokers and clients to subscribe to and can be download on a daily, weekly or monthly basis:
- Swiss Report
- EOD Summary report of total executions
- EOD Summary report of total publications
- EOD Summary report of total rejected trades
- EOD Summary report of all deferred trades and deferral period
- EOD Summary report of all late trades
- EOD Summary report of all quotes published
These reports will be sent to the LSE servers and be available for client download.
Aside from the cost of £0.03 per trade report, are there other costs involved like onboarding?
In addition to the flat APA publication fee is £0.03 per trade published there are connectivity costs dependant on the connectivity solution chosen and a yearly fee of £1,000 for non-LSE members.
Please note that the pricing structure for the SRR, SI Determination and SI Quoting service is different.
How would I use the Portal to report trades with a non-MiFID II counterparty?
It is possible to log on to the portal and manually enter and send a trade report. Similarly, it is possible to publish a trade report via a FIX message direct to the APA. If a firm is using the SRR service, they can send in the trade to the SRR which then determines if the firm’s counterparty is an EEA/EU counterparty or not.
To learn more about how to use the portal please register for one of TRADEcho’s weekly webinars. The webinars aim to bring clarity to the pre and post-trade reporting obligations under MiFID II and include a portal demonstration. Information and registration can be found here.
What is the lead time in connecting to another APA that is not currently connected to TRADEcho’s SRR?
The lead time to connect will vary depending on the APA
If a buy-side firm wants to utilise TRADEcho's Assisted Reporting service would it be mandatory for the firm's executing broker to enter an into an agreement with TRADEcho as well?
Correct. The client will need a contract with TRADEcho’s APA or another APA of the client’s choice. The broker on the other hand needs a contract with TRADEcho’s SRR service to facilitate the Assisted Reporting.
Is Assisted Reporting included in TRADEcho’s standard agreement? Further, if a firm wishes to take on TRADEcho’s Assisted Reporting would this need to be captured in the contract negotiations?
TRADEcho’s Assisted Reporting is part of the standard SRR/APA agreement and is therefore not treated as a separate contract or service.