Reporting of Same Buyer and Seller

In typical MiFID II transaction reporting, the buyer and seller in a transaction are separate entities. For most reports processed through Qomply's systems, this principle holds true. However, there are instances where the buyer and seller are reported as the same entity, a scenario addressed in the ESMA Q&As.

Understanding the Same Buyer and Seller in Reports

In cases where reports show the same buyer and seller, it typically occurs due to specific reporting structures within investment firms. One common instance occurs when a firm managing a discretionary mandate delegates decision-making authority to another investment firm.

In this situation, consider the following example:

· Firm A (Manager): The initial investment manager with decision-making responsibility.

· Firm B (Investment Firm): A firm to which Firm A has delegated investment decision-making under a discretionary mandate.

If Firm B then decides to pass the order back to Firm A for execution, Firm B would report Firm A as both the buyer (its client) and the seller (execution entity) within its transaction reports. This situation effectively captures both sides of the transaction as required, even though Firm A appears as both the buyer and seller.

We have seen instances where some firms have omitted reporting these transactions, mistakenly considering them exempt due to a perceived “no change of ownership.” However, FCA guidance emphasises that these transactions are indeed reportable, as they represent a distinct delegation and execution relationship and the perceived no change of ownership is simply due to the place within the chain that each executing entity is responsible for reporting.

Key Takeaway for Affected Firms

Firms affected by this scenario should review their reporting processes to ensure they comply with regulatory expectations. Specifically, firms should verify that any transactions in which the same entity is recorded as both buyer and seller are reported in line with MiFID II requirements, even if there appears to be no change in ownership. For firms using Qomply, our team is available to provide further guidance on handling such cases, ensuring your transaction reports meet regulatory standards and avoid compliance pitfalls.