MiFID II - Markets in Financial Instruments Directive (2004/39/EC)

The requirements of the EU Markets in Financial Instruments Directive (MiFID II) and the accompanying MiFIR Regulation need to be implemented into production by the market participants by 1 January 2018.

In addition to the extension of the applicable regulations, important components include investor protection, adjustment to the market infrastructure, provision of a target market definition for financial instruments (product governance) as well as a detailed presentation of costs.

WM Datenservice organises central MiFID II working groups with members from industry, regulation, legal interpretation and supports the creation of industry standards. Further, WM provides the financial market with the required information in the used quality.

WM Services in the Context of MiFID II

MiFID II puts e.g. high requirements on investor protection and market transparency. WM Datenservice will, for this purpose, adjust the exiting products and provide the new product MiR II.
 

MiR II (MiFID II / MiFIR) Service

Target Market Classification

Coverage of the target market classification by supplying all manufacturer data, including additional information (e.g. product category for knowledge and experience) as well as an indicative target market classification conducted by WM on the basis of the rules agreed upon with the banking industry, provided that the manufacturer does not supply information on the target market.

In addition, WM provides a customized target market determination pursuant to the rules of classification stipulated by the customer of WM.

Cost Transparency

WM Datenservice supplies the product costs depending on the product for financial instruments (funds, derivatives) and the differentiation in ex ante /ex post costs as well as a detailed description of the different cost positions (amongst other things  entry costs, exit costs, event related cost for funds, total costs for funds subject to period).

Classification of Financial Instruments

Classification of financial instruments to meet the transparency requirements whether the financial instruments in question are equity or non-equity instruments.

Classification of financial instruments in connection with the publication of information by investment firms (“Best Execution“): Classification of financial instruments as per RTS 28.

Identification of Leverage Products

Identification whether the product in question is a leverage product as per MiFID II/MiFIR or not.

Tick Size as per MIFID II

This field contains a code for the regulation as per Article 49 pursuant to which the minimum tick size for the security is determined. 

Product Approval Procedure Identifier

This identifier indicates whether a financial instrument has undergone a product approval process and according to which provisions/regulations this process has been effected.

MiR Service

Complexity Identification

MIFID II describes in Article 25 the responsibility of investment firms to demand their customers for information regarding the customer’s knowledge and experience in regard to the special type of offered or requested products in order to be able to evaluate if these (products) are appropriate for the customer. WM identifies the respective instruments in the field “MIFID II COMPLEXITY IDENTIFIER“.
   
Classification of Pre-/Post-Trade Relevance

Pre-Trade Transparency
Responsibility to publish the current money and offering prices as well as the depth of the trading positions.

Post- Trade Transparenc
Responsibility to publish prises, the volume and time of the concluded/completed businesses “as near to real time as possible.” WM determines the financial instruments that are subject to the transparency guidelines.

Transaction Reporting as per Art. 26 MiFIR

Investment firms which conduct business with financial instruments report the complete and true details of these businesses as soon as possible to the responsible authority. WM determines the financial instruments that are subject to transaction reporting.

Transaction Reporting direct/indirect Identifier

This field indicates the direct or indirect reporting as per Article 26 MiFIR.

Identification of Standard Marketing Sizes

The standard marketing size is required for the transparency of systematic internalisers and regulates the quotation prices as well as the execution of customer orders. WM supplies the information provided by ESMA.

Classification of the Liquidity of Markets and Financial Instruments

“Liquid market“ defines a market for a financial instrument or a category of financial instruments in which buyers or sellers willing to buy or sell are constantly available. Criteria as e.g. the average frequency and volume of businesses are here taken into consideration. WM provides the data ”Country of the most liquid market“ and liquid instrument supplied by ESMA in form of data records.

Classification of Markets

The identifier indicates whether the market in question is a regulated market, a MTF (Multilateral Trading Facility), an OTF (Organised Trading Facility) or a systematic internaliser pursuant to Directive 2014/65/EU. Further, an identifier whether the market in question is/is not a SME growth market is also supplied. WM is the transporter of the information provided by ESMA.

Instrument with an embedded derivative identifier

This field contains an identifier whether the security in question is/is not an instrument with an embedded derivative pursuant to MiFID II/MiFIR.

FIRDS Identifier / ESMA Identifier

This field identifies all financial instruments that are included in the FIRDS (Financial Instruments Reference Data System).

GAT Service

Identification of Product Intervention

The national authorities have the competence to exclude individual financial instruments from trading/distribution. The stated prohibitions are reported to ESMA. WM determines the financial instruments that are affected by the product intervention.

Transaction Reporting as per Art. 26 MiFIR

Investment firms which conduct business with financial instruments report the complete and true details of these businesses as soon as possible to the responsible authority. WM determines the financial instruments that are subject to transaction reporting.

Transaction Reporting direct/indirect Identifier

This field indicates the direct or indirect reporting as per Article 26 MiFIR.
 

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Olof von Sponeck
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