MiFID Transaction Reporting | Troubleshooting
8 March 2022
For MiFID Reporting of the Trading Venue field for trades that are made off market (or more commonly known as OTC), there is a choice of using XXXX or XOFF as the trading venue. Brexit complicated matters by presenting an additional layer of checking before reporting. Special attention must be taken, after Brexit, as the venue’s location becomes very important. UK venues will be treated as third country venues for firms in the EEA.
XXXX and XOFF are different in the following way:
• For trades on instruments that are not in tradeable on an EEA venue (for EU firms) or a UK or EEA venue (for UK firms) but the underlying instrument is tradeable, report the trading venue as ‘XXXX’
• For trades on instruments that are tradeable on an EEA venue (for EU firms) or a UK or EEA venue (for UK firms), report the trading venue as ‘XOFF’
To help in understanding the subtle differences, the flowchart below summarises the process in deciding when to use XXXX of XOFF for UK and EEA firms.
To determine which of XXXX or XOFF to use, you can use the freely-available Qomply FIRDS lookup tool to establish whether an instrument was tradeable on an exchange in the UK or EEA at a given date.
The video above takes you through using this tool.
Access the Tool
In order to determine XXXX or XOFF, first determine reportability
To determine if a particular instrument was considered reportable on a trade date, enter the ISIN and the Trade Date of 10-01-2022, as shown in the image below. If a date is not entered, the system will retrieve data for today.
In our test, we use ISIN IE00B00FV011
The results show whether the instrument is Reportable in the UK and/or Reportable in the EU along side the Trading Venue on which it was active. If you are reporting to a UK regulator then you are only interested in whether the instrument was reportable in the UK. Therefore, if TRUE appears at least once in the “Reportable in UK” column, the instrument is reportable.
Since the instrument was reportable (as we see TRUE in the Reportable in the UK column) and traded OTC (also known as "off a trading venue"), then in this example we would report the trading venue as XOFF.
If the instrument was not reportable, then in column “Reportable in the UK” we should NOT see TRUE in any of the rows. If this was the case, then we would follow the flow chart above to determine if any of the underlying instrument(s) is reportable. If there were no underlying instruments, then trade may not be reportable. If there are underlying instruments and at least one of the underlying instruments are reportable, then the transaction is reportable and the trading venue should be noted as XXXX if the transaction occured OFF a trading venue, or more commonly known as OTC.
In this example, we will illustrate the use of XXXX.>
As seen in the image below, we will use ISIN DE000F91J1YF and Trade Date of 20-09-2021.
For this ISIN and trade date, the results show that the instrument is not reportable. We know this because the "Reportable in the UK" column contains one value: False. This means for a UK-based firm trading OTC in the UK, this instrument is not reportable. However, let's say that this transaction has one underlying ISIN: IE00B00FV011.
Following the flowchart above, we know that we must check each underlying instrument of the transaction to determine reportability.
We would repeat this process for each underlying instrument. In doing so, we can see that the underlying instrument is reportable for the trade date of 20-09-2021.
Therefore, since the underlying instrument is reportable and the transaction was executed OTC, we use XXXX as the trading venue.
If none of the underlying instruments were reportable, then the transaction may not be MiFID reportable.
Perform Quality Assurance on your transaction reporting through Qomply's cloud-based ReportAssure Suite. Qomply performs accuracy, timeliness, and completeness checks providing assurance that transaction reporting systems are working correctly.
Checks can be done before or after sending to the regulatory or ARM. Qomply's platform is built to respond to increasing levels of complexity of regulation, rules, and data analytics. Qomply's tools offer straight-forward interfaces and streamlined APIs enabling market participants to either use as a stand-alone products or integrate within their existing technical infrastructure.
If you are looking to conduct your own periodic quality assurance, accuracy, completeness, and timeliness checks, then the ReportAssure Suite puts 1,000 checks at a click.
Require a Comprehensive One-off Health Check Instead?
Quality Assurance in a Click
Want to know more or just want to phone us up for a chat?
+44(0)20 8242 4789