MAR 9.1 Application, introduction, approach and structure

Application

MAR 9.1.1 G RP

1This chapter applies to:

  1. (1)

    a UKperson (that is a person whose registered office or head office is located in the UK) seeking authorisation to provide a data reporting service;

  2. (2)

    a UK branch of a third countryperson seeking authorisation to provide a data reporting service;1

  3. (3)

    a UKMiFID investment firm operating a trading venue seeking verification of its rights to provide a data reporting service under regulation 5(b) or (c) of the DRS Regulations;1

  4. (4)

    a UK RIE seeking verification of its rights to provide a data reporting service under regulation 5(d) of the DRS Regulations; and1

  5. (5)

    a data reporting services provider.1

This chapter is not limited to operators of trading venues and firms.

[Note: article 59 of MiFID]

Introduction

MAR 9.1.2 G RP

Title V of MiFID sets out harmonised market data services authorisation and supervision requirements. These are designed to ensure a necessary level of quality of trading activity information across EU financial markets for users, and for competent authorities to receive accurate and comprehensive information on relevant transactions. These requirements provide for:

  1. (1)

    approved publication arrangements (APAs) to:

    1. (a)

      improve the quality of trade transparency information published in relation to over the counter trading; and

    2. (b)

      contribute significantly to ensuring such data is published in a way that facilitates its consolidation with data published by trading venues;

  2. (2)

    consolidated tape providers (CTPs) to supply a comprehensive consolidated tape of equity and equity-like financial instruments data from all APAs and trading venues to make it easier for market participants to gain access to a consolidated view of trade transparency information;

  3. (3)

    CTPs to enable a comprehensive consolidated tape for non-equity financial instruments with an extended date for the application of national measures transposing MiFID; and

  4. (4)

    approved reporting mechanisms (ARMs) to provide the service of transaction reporting on behalf of investment firms.

Approach to transposition

MAR 9.1.3 G RP

The market data services authorisation and supervision requirements in Title V of MiFID are implemented in the UK through a combination of:

  1. (1)

    HM Treasury legislation in the form of:

    1. (a)

      the DRS Regulations which set out a separate regulatory framework for persons providing one or more data reporting service in the UK; and

    2. (b)

      the MiFI Regulations which set out additional provisions addressing requirements imposed by MiFIR and EU regulations;

  2. (2)

    this chapter; and

  3. (3)

    EU regulations including:

    1. (a)

      MiFID RTS 1;

    2. (b)

      MiFID RTS 2;

    3. (c)

      MiFID RTS 3;

    4. (d)

      MiFID RTS 13;

    5. (e)

      MiFID ITS 3;

    6. (f)

      the MiFID Org Regulation; and

    7. (g)

      the MiFIR Delegated Regulation.

Structure

MAR 9.1.4 G RP

The following table provides an overview of this chapter:

Handbook reference

Topic and specific application

MAR 9.1

Application, introduction, approach and structure

MAR 9.2

Authorisation and verification

MAR 9.3

Notification and information

MAR 9.4

Supervisory regime

MAR 9.5

Frequently Asked Questions

MAR 9 Annex 1D to MAR Annex 10D

Forms

MAR 9.2 Authorisation and verification

Application form and notification form for members of the management body

MAR 9.2.1 D RP
  1. (1)

    1Each of the following must complete the forms in (2):

    1. (a)

      an applicant for a data reporting service authorisation;

    2. (b)

      a UK MiFID investment firm operating a trading venue seeking verification of its rights to provide a data reporting service under regulation 5(b) and (c) of the DRS Regulations; and

    3. (c)

      a UK RIE operating a trading venue seeking verification of its rights to provide a data reporting service under regulation 5(d) of the DRS Regulations.

  2. (2)

    The forms in (1) are:

    1. (a)

      the application form at MAR 9 Annex 1D; and

    2. (b)

      the notification form for the list of members of the management body at MAR 9 Annex 2D.

MAR 9.2.2 G RP

MAR 9 Annex 1D and MAR 9 Annex 2D are derived from Annex I and Annex II respectively of MiFID ITS 3.

Variation of authorisation form

MAR 9.2.3 D RP

1If a data reporting services provider wishes to extend or otherwise vary its data reporting service authorisation it must complete the variation of authorisation form at MAR 9 Annex 3D.

MAR 9.2.4 G RP

1 MAR 9 Annex 3D requires completion of Annex I of MiFID ITS 3 in the case of an extension of authorisation and, if relevant, Annex II of MiFID ITS 3 if the members of the management body are different from the existing authorised data reporting services provider.

Cancellation of authorisation form

MAR 9.2.5 D RP

1If a data reporting services provider wishes to cancel all of its data reporting service authorisation it must complete the cancellation of authorisation form at MAR 9 Annex 4D.

Provision of the forms in MAR 9 Annexes 1D, 2D, 3D and 4D to the FCA

MAR 9.2.6 D RP

A person must provide MAR 9 Annexes 1D, 2D, 3D and 4D together with supporting documentation to the FCA by:

  1. (1)

    emailing MiFiDII.Applications@fca.org.uk; or

  2. (2)

    posting to the FCA addressed to:

    The Financial Conduct Authority

    FAO The Authorisations Support Team

    12 Endeavour Square2

    London

    E20 1JN.2

MAR 9.3 Notification and information

Notification to the FCA of material changes in information provided at the time of authorisation

MAR 9.3.1 R RP

1A data reporting services provider must promptly complete the material change in information form at MAR 9 Annex 5D to inform the FCA of any material change to the information provided at the time of its authorisation.

Notification to the FCA of change to membership of management body

MAR 9.3.2 G RP

1 A data reporting services provider must promptly complete the notification form for changes to the membership of the management body form at MAR 9 Annex 6D to inform the FCA of any change to the membership of its management body before any change to the membership of its management body or when this is impossible within 10 working days after the change.

MAR 9.3.3 G RP

1 MAR 9 Annex 6D is derived from Annex III of MiFID ITS 3.

Notification to the FCA by an APA or a CTP of compliance with connectivity requirements

MAR 9.3.4 D RP

1As soon as possible and within 2 weeks of being authorised as an APA or a CTP, an APA or a CTP seeking a connection to the FCA’s market data processor system must:

  1. (1)

    sign the MIS confidentiality agreement at MAR 9 Annex 10D; and

  2. (2)

    email it to MDP.onboarding@fca.org.uk or post an original signed copy to the FCA addressed to:

    The Financial Conduct Authority

    FAO The Markets Reporting Team

    12 Endeavour Square3

    London

    E20 1JN.3

MAR 9.3.5 G RP
  1. (1)

    To ensure the security of the FCA’s systems, the FCA requires an APA or a CTP to sign the MIS confidentiality agreement before receiving the FCA’s Market Interface Specification (MIS).

  2. (2)

    Once the FCA receives the MIS confidentiality agreement from the APA or the CTP, the FCA will provide the APA or the CTP with Market Interface Specification (MIS).

MAR 9.3.6 D RP

An APA or a CTP seeking a connection to the FCA’s market data processor system must complete the form at MAR 9 Annex 7D as soon as possible and no later than 4 weeks following authorisation as an APA or a CTP.

MAR 9.3.7 G RP

1The FCA expects an APA or a CTP to deal with it in an open and co-operative way in order to establish a technology connection for the provision of data to the FCA as required by article 22 of MiFIR.

Yearly notifications to the FCA

MAR 9.3.8 G RP

1 A data reporting services provider must complete the yearly notification form in MAR 9 Annex 8D:

  1. (1)

    within 3 months of the 12 month anniversary of the commencement of its authorisation; and

  2. (2)

    then every year within 3 months of the same date.

MAR 9.3.9 G RP

1For example, if a data reporting services provider’s authorisation commences on 3 January 2018, the data reporting services provider must provide the information in MAR 9 Annex 8D on or before 3 April 2019 and then every year thereafter on or before 3 April of that particular year.

Ad hoc notifications to the FCA

MAR 9.3.10 D RP

A data reporting services provider must promptly complete the ad hoc notification form in MAR 9 Annex 9D to notify the FCA in respect of all matters required by MiFID RTS 13.

MAR 9.3.11 G RP

Information to be provided in MAR 9 Annex 9D includes information relating to 2breaches in physical and electronic security measures and service interruptions or connection disruptions.

Provision of the forms in MAR 9 Annexes 5D, 6D, 7D, 8D and 9D to the FCA

MAR 9.3.12 D RP

A data reporting services provider must promptly provide the forms in MAR 9 Annexes 5D, 6D, 7D, 8D and 9D and supporting documentation to the FCA:

  1. (1)

    at MRT@fca.org.uk; or

  2. (2)

    by posting it to the FCA, addressed to:

    The Financial Conduct Authority

    The Markets Reporting Team

    12 Endeavour Square3

    London

    E20 1JN.3

MAR 9.4 Supervisory regime

Overview of supervisory approach

MAR 9.4.1 G RP
  1. (1)

    1The FCA expects to have an open, cooperative and constructive relationship with data reporting services providers to enable it to understand and evaluate data reporting services providers’ activities and their ability to meet the requirements in the DRS Regulations. As part of that relationship the FCA expects a data reporting services provider to provide it with information about any proposed restructuring, reorganisation or business expansion which could have a significant impact on the data reporting services provider’s risk profile or resources.

  2. (2)

    The FCA will, when necessary, arrange meetings between the FCA and key individuals of the data reporting services provider for this purpose.

  3. (3)

    The FCA expects the data reporting services provider to take its own steps to assure itself that it will continue to satisfy the data reporting services provider organisational requirements when considering any changes to its business operations.

Overview of supervisory tools

MAR 9.4.2 G RP

1The FCA will use a variety of tools to monitor whether a data reporting services provider complies with its regulatory requirements. These tools include (but are not limited to):

  1. (1)

    desk-based reviews;

  2. (2)

    liaison with other regulators;

  3. (3)

    meetings with management and other representatives of a data reporting services provider;

  4. (4)

    on-site visits;

  5. (5)

    use of auditors;

  6. (6)

    use of a skilled person;

  7. (7)

    reviews and analysis of periodic returns and notifications;

  8. (8)

    transaction monitoring;

  9. (9)

    making recommendations for preventative or remedial action;

  10. (10)

    giving individual guidance;

  11. (11)

    restrictions on permission to carry on a data reporting service; and

  12. (12)

    imposing individual requirements.

MAR 9.5 Frequently Asked Questions

MAR 9.5.1 G RP

1 Q. Are there any grandfathering arrangements for ARMs or trade data monitors operating prior to MiFID?

A. No. Persons wishing to provide a data reporting service must apply to be authorised as a data reporting services provider.

MAR 9.5.2 G RP

Q. We are a trading venue operator. Can you please clarify how we can provide a data reporting service under the derogation from needing authorisation in article 59(2) of MiFID?

A.

  1. (1)

    The derogation (or exception) in article 59(2) of MiFID allows Member States to allow a trading venue operator to provide a data reporting service without prior authorisation, if the operator has verified that they comply with Title V of MiFID.

  2. (2)

    The United Kingdom has adopted this derogation in regulation 5(b) to (d) of the DRS Regulations.

  3. (3)

    As a result a trading venue operator must apply for verification of its rights to provide a data reporting service using the form in MAR 9 Annex 1D.

  4. (4)

    The application process for a trading venue operator to become a data reporting services provider is the same as for a person to become a data reporting services provider, except for the requirements for the management body of a market operator addressed in MAR 9.5.3G below.

  5. (5)

    Successful applicants will become data reporting services providers and will be required to comply with the regulatory framework in MAR 9.1.3G. They will be subject to fees charged by the FCA in MAR 9.5.4G.

MAR 9.5.3 G RP

Q. We are a market operator. Can we use the same members of our management body?

A. Yes. Where the members of the management body of the APA, the CTP or the ARM are the same as the members of the management body of the regulated market you will be deemed to have complied with the management body requirement in regulation 13(1)(a) and (b) of the DRS Regulations. You will only be required to complete the full name and personal national identification number or equivalent thereof fields of MAR 9 Annex 2D for each of these members of the management body. For any additional members of the management body of the APA, the CTP or the ARM that are not the same as the members of the management body of the regulated market, you must notify us of these persons by completing all fields of MAR 9 Annex 2D. You must notify us of any change in membership using MAR 9 Annex 6D.

MAR 9.5.4 G RP

Q. Where can I find out information about fees to be charged in respect of data reporting services providers?

A. See FEES 3.2.7R and FEES 4 Annex 11R.

MAR 9.5.5 G RP

Q. How do we go about applying to be an ARM?

A. In summary:

  1. (1)

    You should complete:

    1. (a)

      all of the questions in the application form at MAR 9 Annex 1D; and

    2. (b)

      the notification form for the list of members of the management body at MAR 9 Annex 2D.

  2. (2)

    You should sign the MIS confidentiality agreement at MAR 9 Annex 10D.

  3. (3)

    You should provide the documents referred to in:

    1. (a)

      (1)(a) and (b) together with supporting documentation to the FCA as set out in MAR 9.2.6D; and

    2. (b)

      (2) to the FCA as set out in MAR 9.3.4D.

  4. (4)

    After receiving the documents referred to in (3) and subject to our review of them, we will provide you with a copy of our Market Interface Specification (MIS).

  5. (5)

    If you consider that you can meet our specifications you should obtain the FCA MDP on-boarding application form at MAR 9 Annex 7D and provide the completed form and any relevant documents to us together with the associated fee in FEES 3.2.7R and FEES 4 Annex 11R. Our consideration of your application for authorisation as an ARM is dependent on us reviewing a completed FCA MDP on-boarding application form.

  6. (6)

    We may at any time request additional information to proceed with the assessment of the application.

  7. (7)

    During our consideration of your application for authorisation or verification, we will normally invite you to work with us to undertake the appropriate testing required for you to establish connection to us.

  8. (8)

    Having obtained and examined the necessary information we require from you, we will do one of three things in relation to your application for authorisation:

    1. (a)

      authorise you as an ARM; or

    2. (b)

      issue a warning notice that we propose to authorise you as an ARM with the imposition of a requirement on your authorisation; or

    3. (c)

      issue a warning notice that we propose to refuse the application for authorisation.

  9. (9)

    If we issue a warning notice, the procedure in DEPP applies.

  10. (10)

    If we approve your application for authorisation or verification, we will confirm your authorised status.

MAR 9.5.6 G RP

Q. Does an investment firm need to be authorised as an ARM to send transaction reports to the FCA?

A. No. If you are a MiFID investment firm that wishes to send transaction reports to us to satisfy your own transaction reporting obligations under MiFIR, you do not need to become authorised as an ARM. You are permitted to connect directly to us although there will be a requirement to sign a MIS confidentiality agreement with us, to satisfy connectivity requirements and to undertake testing associated with connecting to our systems. For the associated costs please see FEES 3.2.7R for relevant on-boarding costs. If you want to connect to us to send reports on behalf of other investment firms then you must become authorised as an ARM.

MAR 9.5.7 G RP

Q. Where can I find a list of data reporting services providers?

A. Article 59(3) of MiFID requires ESMA to establish a list of all data reporting services providers. Further, regulation 6 of the DRS Regulations requires the FCA to maintain a register of data reporting services providers.

MAR 9.5.8 G RP

Q. I am a data reporting services provider and am experiencing technical issues. What do I do?

A. In the first instance please contact Market Data Processor support at MDP.technicalOnboarding@soprasteria.com and copy DRSP supervision at MRT@fca.org.uk with a succinct summary of the technical issue(s) encountered.

MAR 9.5.9 G RP

Q. Can any trading venue report transactions for the purposes of article 26 of MiFIR to the FCA using an ARM?

A. Yes. The ability of a trading venue to submit data to an ARM is consistent with the definition of an ARM which enables a trading venue to submit information, on its own behalf, to an ARM. It is also consistent with paragraph 2 of article 9 [Security] of MiFID RTS 13, which enables a third party to submit information to an ARM on behalf of others. More generally, it supports the purpose underlying MiFIR and MiFID of facilitating the detection of cases of market abuse.

MAR 9.5.10 G RP

Q. Can a group of investment firms aggregate their reporting via an internal hub?

A. Yes. A group of investment firms may use a hub to assist with aggregating transaction reporting data for each legal entity that is an investment firm in the group for the purposes of article 26 of MiFIR provided that the hub is either an ARM or the hub uses an ARM to report the transaction data to the FCA. Paragraph 2 of article 9 [Security] of MiFID RTS 13 confirms that an investment firm (‘reporting firm’) may use a third party (‘submitting firm’) to submit information to an ARM.

MAR 9.5.11 G RP

Q. Which form should I use if I wish to cancel some, but not all, of my data reporting service?

A. You should use the form at MAR 9 Annex 3D. If you expect the wind-down (run-off) of the service that you wish to cancel to take longer than six months you should discuss this with your usual supervisory contact.

MAR 9.5.12 G RP

Q. I intend to apply to be authorised to provide the data reporting service of an APA. May I establish connectivity requirements while my application for authorisation is being considered?

A. Yes. The MIS confidentiality agreement is available on our website at www.fca.org.uk/markets/market-data-regimes/market-data-reporting-mdp

together with instructions on how to obtain the Market Interface Specification (MIS) for connectivity.