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What fields are mandatory in a MiFID II RTS 22 transaction report?
RTS 22 requires a minimum of 65 fields per transaction report. Essential fields include: reporting firm LEI (Field 4), client identifier (LEI or national identifier, Field 7), decision maker LEI (Field 9), instrument ISIN (Field 41), execution venue MIC code (Field 36), price (Fields 33-34), quantity (Field 30), execution date-time in UTC (Field 28), buyer/seller indicator (Field 18), and trading capacity (Field 29 - principal, agent, or matched principal). All 65 fields are specified in Annex I of Commission Delegated Regulation (EU) 2017/590. (MiFID II Art. 26; RTS 22)
What is the transaction reporting deadline under MiFID II?
Transaction reports must be submitted to the NCA by end of the following business day (T+1). For transaction reports submitted via an ARM, the T+1 obligation applies to the time the report is submitted to the ARM. If a trade is executed at 17:00 on Monday, the report must reach the NCA by end of Tuesday. Reports for trades executed outside NCA business hours must still meet the T+1 deadline based on the following trading day. (MiFID II Art. 26(1))
How does best execution work under MiFID II?
Best execution (MiFID II Art. 27) requires investment firms to take all sufficient steps to obtain the best possible result for clients. For retail clients, the best result is typically the total consideration (price plus all costs). Firms must maintain an order execution policy listing the execution venues used for each class of instrument. Firms must annually publish venue execution quality data under RTS 27 (venues) and RTS 28 (brokers). Builders must record the venue selection rationale for each order as evidence of best-execution compliance.
Who is required to submit MiFID II transaction reports?
Every investment firm authorised under MiFID II that executes a transaction in a financial instrument admitted to trading or traded on an EU trading venue must submit a transaction report, regardless of whether the trade was executed on-venue or OTC. Non-EU investment firms may have reporting obligations if they execute trades via EU branches, on EU venues, or in instruments admitted to trading in the EU. Builders must design reporting systems that apply the transaction reporting obligation check consistently before every execution.
What is the difference between client categorisation levels under MiFID II?
MiFID II has three client categories: Retail Client (highest protection - suitability/appropriateness assessment, KID/KIID delivery, best-execution reporting), Professional Client (reduced protections - appropriateness not required for professional products, reduced reporting), and Eligible Counterparty (minimal protections - best-execution obligation significantly reduced). Clients can request re-categorisation (opting up or opting down). Builders must implement a categorisation workflow with evidence collection, decision storage, and protection level enforcement per category.
What is the double volume cap mechanism?
The double volume cap (DVC) under MiFIR Art. 5 (Regulation (EU) 600/2014) limits dark trading under reference price and negotiated transaction waivers. No single venue may execute more than 4% of total EU volume in a given instrument using these waivers over a rolling 12-month period. Total dark trading across all EU venues using these waivers is capped at 8% per instrument. ESMA monitors and publishes DVC data monthly. When a cap is breached, trading under the relevant waiver is suspended for 6 months. Builders must implement real-time DVC monitoring against ESMA-published data.
What is product governance under MiFID II?
Product governance (MiFID II Art. 24(2), Delegated Directive 2017/593) requires both manufacturers (firms that create financial products) and distributors (firms that sell products to clients) to define a target market for every product. The target market specifies the type of client for whom the product is designed. Distributors must only sell products to clients whose profile falls within the target market. Builders must implement target market data models, compatibility scoring between client profiles and product target markets, and evidence storage of every product-client compatibility assessment.
What does the suitability assessment requirement mean for builders?
Under MiFID II Art. 25(2), investment firms providing investment advice or portfolio management must assess whether a service or instrument is suitable for the specific client. The suitability assessment covers three pillars: (1) knowledge and experience in the relevant investment field; (2) financial situation including the ability to bear losses; (3) investment objectives including risk tolerance. Builders must implement suitability questionnaires with weighted scoring, suitability determination logic, suitability report generation, and delivery tracking. All suitability data must be retained for a minimum of 5 years.
How do pre-trade transparency waivers work under MiFID II?
Investment firms operating trading venues can apply to their NCA for pre-trade transparency waivers that allow orders to be withheld from pre-trade display. Approved waiver types include: reference price waivers (using the EBBO midpoint), negotiated transaction waivers (for large trades meeting LIS thresholds), large in scale (LIS) waivers, and order management facility (OMF) waivers. Each waiver use must be identified by the appropriate waiver indicator code in post-trade publications via an APA. Builders must store the waiver indicator as part of the order lifecycle record. (MiFIR Art. 4; RTS 1 and 2)
What are the KID/KIID delivery obligations for retail product platforms?
Under the PRIIPs Regulation and the UCITS Directive, KIDs and KIIDs must be made available to retail clients free of charge, in good time before the client is bound by any contract or offer. Delivery can be in paper form or electronically if the client agrees. Builders must implement: KID/KIID version management (KIIDs must be updated at least annually), delivery workflow with date-timestamp recording, audit trail proving delivery occurred before execution, and an accessible online repository of current and historical KIDs/KIIDs. (PRIIPs Regulation Art. 13; UCITS Directive Art. 80)
What is the MiFID II appropriateness assessment?
An appropriateness assessment (MiFID II Art. 25(3)) is required when an investment firm provides execution-only services in complex financial instruments (derivatives, structured products) to non-advised retail clients. The firm must assess whether the client has the necessary knowledge and experience to understand the risks of the specific instrument. If the client is not appropriate, the firm must warn them but may still execute the trade. Builders must implement appropriateness questionnaire workflows, scoring logic, and mandatory warning screens when the assessment result is negative.
What transaction reporting obligations apply to systematic internalisers?
A systematic internaliser (SI) under MiFID II must submit transaction reports for every trade it executes, just like any other investment firm. SIs also have additional pre-trade transparency obligations - they must publish binding quotes for equity instruments up to standard market size (SMS) during continuous trading hours. Builders of SI platforms must implement: SI threshold calculation (frequent, systematic, substantial criteria), quote publication (for equity instruments up to SMS), and regular transaction reporting to the NCA via ARM, plus post-trade publication via APA for OTC trades. (MiFID II Art. 18, 20-21, 26)
What are the RTS 27 and RTS 28 reporting requirements?
RTS 27 requires execution venues (regulated markets, MTFs, OTFs, SIs) to publish quarterly reports on execution quality at the venue level - including price, costs, speed, likelihood of execution, and market impact statistics by instrument and order type. RTS 28 requires investment firms to publish annual reports on their top five execution venues per instrument class where they executed orders, plus a summary of execution quality achieved. Both reports must be published on the firm's website in ESMA-mandated format. Builders must automate the data collection, aggregation, and report generation required for both RTS 27 and 28. (Commission Delegated Regulations 2017/575 and 2017/576)
How must commodity derivative position limits be managed under MiFID II?
MiFID II Art. 57 requires NCAs to set position limits for commodity derivatives traded on EU venues. Firms must monitor their net position across all accounts and venues in real time and must report positions above the large trader threshold daily. Builders of commodity trading platforms must implement: real-time position aggregation across all accounts and sub-accounts, comparison against NCA-published position limits, automated order blocks when clients approach their position limit, and automated generation of large trader position reports for NCA submission. (MiFID II Art. 57-58)
What is the SFTR reporting obligation and how does it interact with MiFID II?
SFTR (EU 2015/2365) requires reporting of securities financing transactions (repos, securities lending, total return swaps) to authorised trade repositories by T+1. While separate from MiFID II transaction reporting, both obligations apply to many of the same investment firms. Builders must implement separate pipelines for MiFID II RTS 22 transaction reports (submitted via ARM to NCAs) and SFTR reports (submitted via trade repository). The LEI requirement applies to both obligations. (Regulation (EU) 2015/2365)