E.U. – ESMA MiFID Market Structures

On 15 November, ESMA issued updated sections 3, 4 and 5 to market structure FAQs.

  • Clarifies position of DEA clients accessing EU trading through sub-delegated DEA.
  • That firms need to be authorized as investment firm under MiFID to provide DEA.
  • And that mandatory tick size regime applies to both orders and quotes in

Solutions Atlantic Holds 4th Annual User Group Meeting

On 9 November, users of Regulatory Reporting System (RRS) gathered in NY and on the phone, as far away as India, to discuss the latest regulatory developments in the global shareholding disclosure space. It was the fourth annual meeting of the RRS User Group hosted by Solutions Atlantic. This year’s discussion focused on the classification of managed holdings and potential changes that might come about next year in the area of short selling in both the EU and Korea. On hand to discuss these and other relevant topics were regulatory experts from aosphere, LLP.

The second half of the meeting focused on the future. Users provided insight to their evolving business needs as it relates to the functionality of RRS and the team at Solutions Atlantic, proposed additional capabilities that should be considered for the 2018 release. Mitch Greess, had this to say about the session, “We truly value the input from our end users as it relates to the strategic direction of RRS.  Having firsthand feedback and insight to their day to day workflow as it relates to global shareholding disclosure enables the team here at Solutions Atlantic to continually deliver a product that is superior to others and continues to be relevant in the hand of our customers.”

U.K. – FCA MiFID, CRD, Handbook

On 10 November, FCA issued rules in handbook notice 49 on MiFID, CRD IV.

  • Follows December 2015, FCA new rules on secondary trading per MiFID II.
  • And July 2015, FCA new second rule-set on implementation of MiFID II.
  • Handbook notice makes rule changes to MiFID II Guide and IFPRU 2.2. for CRD IV.

MiFID II Guide

  • MiFID II Guide Instrument 2017 (FCA 2017/63) adds new definition to Handbook.
  • The guide is to sit on FCA Handbook website but will not form part of handbook.
  • Instrument comes into force 3 January 2018, in line with remaining MiFID provisions.


  • Instrument makes changes to Handbook to ensure implementation of Art 83 CRD.
  • It comes into force on 10 November. Feedback to consultation is in Chap 3 of the notice.

E.U. – ESMA Updated FAQs Re: Protection

On 10 November, ESMA added four questions to FAQs on MiFID II investor protection topics.

  • The new question cover topics of post-sale reporting, record keeping and inducements.
  • Clarifies that securities financing transactions are in scope of Art 16(6) record keeping.
  • And that Art 62(1) Del Reg 2017/565 report applies to retail and professional clients.

U.K. – FCA Market Watch MiFID/LEI

On 8 November, UK FCA issued market watch on conduct, trade reporting.

  • FCA issued market watch 54 newsletter on market conduct and trade reporting issues.
  • Covers LEIs, ESMA instrument reference data, FCA transitional arrangements, trading
    venue operator, MiFID II and market data obligations, authorizations and permissions.

Legal Entity Identifier (LEI)

  • Firms with transaction reporting obligation must establish an LEI and keep it updated.
  • Include investment firms authorized under MiFID, and credit institution under CRD IV.
  • Also for operators of a trading venue, or UK branch of a third country investment firm.
  • Such firms are also required to include eligible clients’ LEIs in their transaction reports.
  • Clients who are legal entities or structure including companies, charities or trust must
    obtain LEI code, if they want their executing firm to continue to act from 3 January 2018.
  • FCA has produced leaflet which executing firms can use in communication with clients.

ESMA Instrument Reference Data

  • ESMA has issued detail of reference data files, together with instructions downloading.
  • Identified the financial instruments in scope for MAR, but noted ESMA statement that
    it could not take responsibility for information being complete, accurate, or up to date.

FCA Transitional Arrangements

  • On 12 January 2018, FCA is decommissioning MiFID I transaction reporting system (ZEN).
  • Will use new FCA Market Data Processor (MDP) IT system to meet the new transaction
    reporting requirements for MiFIR, which are due to come into effect from 3 January 2018.
  • Set out approach to MiFID I transaction reporting obligation after the cut-over to MiFIR.

Trading Venue Operators

  • Venue operators should not report the transaction of a UK branch of third country firm.
  • As FCA to receive transaction report from these firms as if they were MiFID investment
    firms trading venue operators should not report transactions on behalf of such persons.
  • Will avoid FCA receiving duplicate report, which gives misleading impression of activity.

Market Data Obligations

  • FCA has developed a new Market Data Reporting (MDP) system to enable management
    of large changes in volumes, range of market data types, which entities need to submit.
  • To meet new market data reporting obligations under MiFID II, MiFIR from 3 January 2018.
  • Have now made MDP Industry Test Environment, ITE, available for entities who wish to
    demonstrate they conform with technical specification and on-board to the MDP system.

Authorisations, Permissions for MiFID II

  • Firms needing new permission who have not submitted an application must take action.
  • Can only carry out MiFID II activity for which they have required regulatory permission.
  • Firms may need to plan for the required permissions not being in place by 3 January 2018.
  • If application already submitted FCA have subsequently informed that it is not complete
    must provide the missing information as soon as possible, or cannot assess applications.

Hong Kong – SFC Issues Updated FAQs and User Guide

On 8 November, SFC issued updated FAQs and user guide to reflect HKEx’s new website.


On 10 January, HK SFC issued user guide for reporting short positions.

  • Covered updates to user guide on short position reporting, under expanded scope.
  • Included short position reporting process, accessing SPR services, and registration.
  • Included registration acknowledgement, registration activation, completing forms.
  • As well as system breakdown, browser specification, security tips and contact info.


  • On reportable short positions, and those which are required to be notified to SFC.
  • SFC designation of online communication system, publish reported short positions.
  • Daily reporting requirements, reporting notice, specified shares and specified ATS.


  • From 15 March 2017, reporting required for short positions in designated securities.
  • Eligible for short selling specified by Stock Exchange of Hong Kong Limited (SEHK).
  • List of designated securities eligible for short selling is published on SEHK website.
  • From 15March 2017, SFC will cease publishing list of specified shares on its website.

France – AMF MiFID II Implementation

On 2 November, AMF proposed rules for final implementation of MiFID II.

  • he proposals amend procedures for the approval of investment service providers.
  • Amendments concern Book III and Book V of AMF’s General Regulation (RGAMF).

MiFID Implementation

  • Rules relate to authorization procedure for management, MTFs and position limits.
  • But also introduce provisions for the managers of organized trading facilities, data.
  • AMF is also proposing deleting sections which have now been superseded by MiFIR.
  • Investment advisers to be subject to equivalent conduct rules as investment firms.


  • Comments are due before 1 December 2017.

Malta – MFSA MiFID Trade Reporting

On 2 November, MFSA issued circular on transaction reporting for MiFID II.

  • On 26 October, MFSA seminar on MiFID II provided overview of legislative requirements.
  • During seminar industry raised queries relating to transaction reporting requirement.
  • Circular provides further analysis on some queries which were raised during seminar.
  • Guidance on content, timeline, collective investment schemes, legal entity identifiers.

Trade Reporting

  • MFSA will replicate TRS fields in Transaction Reporting Exchange Mechanism (TREM).
  • Three-phased approach to adopt TREM: on registration; connectivity test; validation.
  • Phase 1 – Registration, all entities which will submit, to file form to get TREM access.
  • Phase 2 – entities registered for TREM, able to test connectivity with MFSA mid-Nov.
  • Phase 3 – MFSA will be ready to receive reports for validation testing mid-December.
  • Submit compressed files, of XML file on MIFIR XSD schema will be parsed, validated.

Funds and LEI

  • MiFIR does not apply to managers of Collective Investment Schemes, as per details.
  • Cited MFSA 9 August 2016, circular reminding of need for legal entity identifier (LEI’).


  • MiFID II enters into force on 3 January  2018.

Australia – ASX Reverse Takeovers Listing

On 4 November, ASX issued final listing rule on reverse takeover issues.

  • Final rule regulates reverse takeovers, and voting exclusions in listing rule 14.11.
  • Minor amendment to rules 1.2 and 1.3 on accounts to provide ASX at application.

No Shareholder Approval

  • Current listing rule 7.1 requires a listed entity to obtain security holder approval,
    for issues of securities over 15% of fully paid ordinary capital in 12 month period.
  • Exception did not cover issues for a takeover bid to comply with Corporations Act.
    or a merger scheme by way of scheme of arrangement under part 5.1 of that Act.
  • Also excluded issues to fund the cash consideration payable under a takeover bid
    or a merger, if the terms of the issue are disclosed in the bid/scheme documents.
  • Thus, shareholder approval is not currently required for bidder to issue securities,
    under a takeover bid or merger scheme, regardless of number of securities issued.

Changes for Reverse Takeover

  • Above exceptions no longer apply to issues under, or to fund, a reverse takeover.
  • Thus issues for reverse takeover, will now require approval under listing rule 7.1.
  • Reverse takeover is where entity is proposing to acquire securities of other body,
    and aggregate number of equities or to be issued by entity exceeded threshold.
  • If issue equal to, or above, number of fully paid securities at announcement date.
  • Aggregate separate issues if ASX believe are part of same commercial transaction.


  • Followed ASX 10 November 2015 consultation, and 12 April 2017 feedback to responses.
  • ASX does not propose revision to the rule amendments it had previously published.
  • New listing rule amendments are scheduled, to come into effect from 1 December 2017.

U.S. – CFTC Issues $350k Fine Large Trade Reports

On 2 November, CFTC fined Morgan Stanley $350k for large trade reports.

  • Morgan Stanley, an FCM, is required to submit large trader report data to CFTC.

Alleged Violations

  • From 2007-17, firm omitted inclusion of mandatory derivatives data in reports.
  • Omissions resulted from four problems with the proprietary reporting software.
  • As of 2015, 25,000-line items reported daily, from 8.3mn underlying positions.
  • Deficiencies were mainly in two designated contract markets: CME, and MGEX.
  • After first two software issues had been corrected, a third glitch was corrected.
  • 2017, bank discovered and reported, a problem with coding of active accounts.
  • Some positions were not correctly aggregated and therefore were not reported.