IHS Markit has launched a cross-asset class registry of systematic internalisers (SIs) to help firms understand their trade reporting obligations under MiFID II.
The service covers all asset classes covered by ESMA RTS 2, including bonds, all classes of OTC derivatives, equities and equity-like instruments and structured products. It was developed in consultation with the International Swaps and Derivatives Association (ISDA), broker-dealers, Approved Publication Arrangements (APAs) and other industry groups.
SIs are investment firms that fill a significant number of client orders internally. According to MiFID II, when one party to a transaction executed off-venue or on a non-European venue is an SI, that party is responsible for reporting trades on a near real-time basis through an APA. This makes knowing the SI status of counterparties a key determinant in trade reporting workflow. Trade reporting rules and the ability to opt in to the SI regime take effect on 3 January, 2018.
“Dealers are likely to adopt a range of strategies in complying with the SI regime,” says Brie Lam (pictured), director of Regulatory and Compliance Services at IHS Markit. “Some will opt to register broadly, across multiple asset classes and others will register on a granular basis for only the products in which they have significant trade volume. Our registry provides on demand access to SI status, giving firms full pre- and post-trade transparency for whether they are subject to reporting rules on any given trade.”
“We expect regulators to publish a list of firms that are SIs at an entity level, but to fully understand their trade reporting obligations, firms need more granular information about the specific instruments covered by an SI’s classification,” says James Roberts, director, European Public Policy at ISDA. “By offering a central registry of SI classifications that offers this level of granularity, Counterparty Manager supports market participants by helping to remove uncertainty around their MIFID II trade reporting obligations.”
The IHS Markit solution is provided by Counterparty Manager, a platform used by more than 10,000 firms for managing regulatory disclosures and account onboarding documentation. Counterparty Manager will provide a single source of SI data to support trade reporting workflow and also give investment firms an efficient mechanism for disseminating SI status to APAs and their clients.
