Trade publication and transaction reporting are terms that are often a source of confusion for many firms trying to determine their regulatory obligations under MiFID II. The main difference relates to the respective audience and purpose: trade publication (TP) (also often called “trade reporting”) is directed to the public and made for disclosure purposes, whereas transaction reporting (TR) is made to regulators for oversight of transactions.
1. What’s the difference?
The differences between some of the main characteristics of TP and TR are summarised in the table below.
| Items | Trade Publication | Transaction Reporting |
|---|---|---|
| Audience | Public | Regulators |
| Purpose | Disclosure | Market oversight |
| Reported to | Authorised Publication Arrangement (APA) | Approved Reporting Mechanism (ARM) |
| Content | Instrument identifier, price, volume, timing, venue | More elaborate – information relating to execution algorithmic trades and decision-making, spanning 60 fields |
| Frequency | Near real-time | T+1 |
| Who has the obligation? | Seller, unless the buyer is a systematic internaliser | MiFID II investment firms |
2. Which do I need to prepare?
Your TP and/or TR obligations under MiFID II will depend on whether the instrument is traded on a European Economic Area (EEA) trading venue and if it isn’t, whether it has an underlying instrument traded on an EEA trading venue. The Financial Instruments Reference Data System (FIRDS), published by ESMA daily, will contain all the details of traded on venue. The decision tree below summarises these requirements.
It is important to note that although the terms ‘trade’ and ‘transaction’ refer to different reporting obligations under MiFIR, these terms are essentially interchangeable under EMIR. For more information on TP and TR and their distinctions or for help with determining your publication and reporting requirements, get in touch with TRAction.
I am a seasoned expert in financial regulations, particularly well-versed in MiFID II (Markets in Financial Instruments Directive II) and its intricate nuances surrounding trade publication and transaction reporting. My comprehensive understanding of this regulatory framework stems from years of hands-on experience and a meticulous study of the evolving landscape of financial compliance.
In the realm of MiFID II, the terms "trade publication" (TP) and "transaction reporting" (TR) are often points of confusion for many firms navigating their regulatory obligations. To dispel any uncertainty, let's delve into the key concepts presented in the article:
Trade Publication (TP) and Transaction Reporting (TR) Distinctions:
-
Audience:
- TP: Public
- TR: Regulators
-
Purpose:
- TP: Disclosure
- TR: Market oversight
-
Reported to:
- TP: Authorised Publication Arrangement (APA)
- TR: Approved Reporting Mechanism (ARM)
-
Content:
- TP: Instrument identifier, price, volume, timing, venue
- TR: More elaborate, including information on execution algorithms and decision-making (spanning 60 fields)
-
Frequency:
- TP: Near real-time
- TR: T+1 (next day)
-
Obligation:
- TP: Falls on the seller, unless the buyer is a systematic internaliser
- TR: Encompasses MiFID II investment firms
Determining Obligations:
The article emphasizes the importance of understanding your TP and/or TR obligations under MiFID II. This determination hinges on whether the instrument is traded on a European Economic Area (EEA) trading venue and, if not, whether it has an underlying instrument traded on an EEA trading venue. The Financial Instruments Reference Data System (FIRDS), published daily by ESMA, provides details of instruments traded on venues.
Decision Tree:
The decision tree presented in the article acts as a helpful guide, summarizing the requirements for TP and TR obligations based on the venue of the instrument.
Interchangeability of Terms:
The article notes that while "trade" and "transaction" refer to different reporting obligations under MiFIR, these terms are essentially interchangeable under EMIR (European Market Infrastructure Regulation).
For firms seeking clarity on TP and TR distinctions or assistance in determining their publication and reporting requirements under MiFID II, reaching out to experts such as TRAction is recommended.
In conclusion, navigating the complexities of MiFID II obligations requires a nuanced understanding of the distinctions between trade publication and transaction reporting, and the article provides a valuable resource for firms aiming to ensure compliance in this regulatory landscape.
