The UK regulator has authorised six approved publication arrangements, which publish the required post-trade transparency reports required under new European regulations on behalf of investment firms.
MiFID II, the regulations coming into force in the European Union at the beginning of next year, requires all investment firms to report their over-the-counter trades. Buyside firms are not allowed to delegate formal regulatory responsibility to their brokers as they could under MiFID I. Unless a firm is dealing with a Systematic Internaliser (SI), a new MiFID II venue, the seller is responsible for the report.
The regulations also require entities intending to provide a data reporting service to be authorised by their national competent authority. In the UK, the Financial Conduct Authority began to process applications in July and has listed six authorised entities as APAs from 3 January 2018 on its website: Abide Financial, Bats Trading, Bloomberg Data Reporting Services, London Stock Exchange, Tradeweb Europe and Xtrakter.
The FCA has not yet authorised other types of data reporting services providers – approved reporting mechanisms, which provide trade reporting services; or consolidated tape providers. CTPs collect post-trade transparency reports from regulated venues and APAs consolidate them into a continuous electronic live data stream providing price and volume information per financial instrument.
1. Abide Financial is part of NEX Regulatory Reporting, a NEX Group business.
The firm said that the decision to apply for APA status was driven by client demand, with most new and existing clients already in testing.
Collin Coleman, head of NEX Regulatory Reporting, said in a statement: “The use of APAs will be essential for efficient functioning under MiFID II and we strongly encourage any market participants who have not yet commenced testing to do so immediately to ensure they can continue to trade post 3 January 2018.”
2. Bats Trading, owned by the CBOE
Bats Europe said in April it had expanded its trade reporting facility, BXTR, to offer an assisted reporting model. This allows buyside firms to enable their brokers to submit trade reports on their behalf using the broker’s existing connectivity to Bats Europe.
Bloomberg and Bats Europe also announced a joint initiative in April to provide clients with the ability to report all asset classes via one feed directly through Bloomberg’s Regulatory Hub. RHUB clients can use the Bats APA to fulfil equity and ‘equity-like’ trade reporting requirements and the Bloomberg APA for all other asset classes.
Bats Europe also has an initiative with Trax’s APA customers to allow them to direct equity trade reports to the Bats APA. Firms can reduce technical burdens through a single reporting connection and improve flexibility by routing reports to either the cross-asset class Trax APA or the Bats APA for equities.
3. Bloomberg Data Reporting Services
Alejandro Perez, global head of post-trade solutions at Bloomberg, said in a statement: “We have already begun testing our end-to-end workflow with the APA. With this approval we are ready to help clients satisfy their public reporting requirements from pre-trade onwards, along with the other MiFID II mandates addressed by our comprehensive suite of solutions.”
4. London Stock Exchange
TRADEcho, the exchange’s APA service, has been brought to the market through a partnership with Boat Services. The LSE said that TRADEcho also offers pre-trade SI Determination, SI Quoting and a smart report router which provides firms with the tools to determine if a trade is eligible for publication and whether it is their responsibility to make the trade public.
Brian Schwieger, global head of equities products at London Stock Exchange Group, said in a statement: “Through LSEG’s TRADEcho and UnaVista services, we can offer our customers a single connectivity solution for all their real time publication and reporting requirements under MiFID II and MiFIR for both on-exchange and OTC transactions.”
5. Tradeweb Europe
Tradeweb launched its APA-early facility last December last year to enable firms to connect and test ahead of MiFID II implementation. The firm said the APA has commitments to participate from sell-side firms representing more than 60% of OTC non-equity trading volumes.
Simon Maisey, MD, global head of business development at Tradeweb, said in a statement: “Buyside firms have shown particular interest in our ‘Assisted Reporting’ service, which helps them comply with post-trade reporting obligations without having to set up direct connectivity. This saves them time, money and effort, while eliminating uncertainty over how to deal with different trades.”
6. Xtrakter, from Trax, a wholly owned subsidiary of MarketAxess
The firm said the APA is available through the Trax Insight platform, which offers a comprehensive pre- and post-trade transparency solution including quote publication, SI determination and instrument liquidity classification.
Geoffroy Vander Linden, head of transparency solutions at Trax, said in a statement: “To help firms better manage these risks, the Trax Insight system has been helping buy- and sellside firms actively test their readiness for MiFID II trade and transaction reporting since November 2016, well ahead of the MiFID II implementation date of 3rd January 2018.”