Management Consultant Toolkit

MIFID II and MIFIR

MiFID is the Markets in Financial Instruments Directive (2004/39/EC). It has been applicable across the European Union since November 2007. It is a cornerstone of the EU's regulation of financial markets seeking to improve the competitiveness of EU financial markets by creating a single market for investment services and activities and to ensure a high degree of harmonised protection for investors in financial instruments.

MIFID I

MiFID sets out:

conducts of business and organisational requirements for investment firms;

authorisation requirements for regulated markets;

regulatory reporting to avoid market abuse;

trade transparency obligation for shares; and

rules on the admission of financial instruments to trading.

MIFID II AND MIFIR

On 20 October 2011, the European Commission adopted a legislative proposal for the revision of MiFID which took the form of a revised Directive and a new Regulation. After more than two years of vigorous debate, the Directive on Markets in Financial Instruments repealing Directive 2004/39/EC and the Regulation on Markets in Financial Instruments, commonly referred to as MiFID II and MiFIR, were adopted by the European Parliament on 15 April 2014, by the Council of the European Union on 13 May 2014 and published in the EU Official Journal on 12 June 2014.

Building on the rules already in place, these new rules are designed to take into account developments in the trading environment since the implementation of MiFID in 2007 and, in light of the financial crisis, to improve the functioning of financial markets making them more efficient, resilient and transparent.

MIFID II / MIFIR Timeframe

ESMA’S ROLE

Technical standards

MiFID II and MiFIR empower ESMA to develop numerous draft regulatory technical standards (RTS) and draft implementing technical standards (ITS) and ESMA delivered three sets of technical standards

on 29 June 2015 (Final Report)
on 28 September 2015 (Final Report, Technical Standards and CBA)
on 11 December 2015

The rules contained in these draft technical standards, once implemented, will bring the majority of non-equity products into a robust regulatory regime and move a significant part of OTC trading onto regulated platforms. More specifically, the key rules introduce:

Fairer, safer and more efficient markets through:

tests to determine whether a non-financial firm’s speculative investment activities are so great that it should be subject to MiFID II;
ranges for the new EU-wide commodity derivatives position limits regime;
rules governing high-frequency-trading, imposing a strict set of organisational requirements on investment firms and trading venues;
provisions regulating the non-discriminatory access to central counterparties (CCPs), trading venues and benchmarks, designed to increase competition;
provisions requiring trading venues to offer disaggregated data on a reasonable commercial basis.

Greater transparency through use of :

thresholds for the pre-trade and post-trade transparency regimes extended to equity-like instruments, bonds, derivatives, structured finance products and emission allowances;
a newly-introduced liquidity assessment for non-equity instruments;
a newly-introduced trading obligation for shares and certain derivatives to be traded only on regulated platforms and, in the case of shares, systematic internalisers, instead of over-the-counter;
a double volume cap mechanism to limit dark trading and reshape the use of waivers for shares and equity-like instruments;
newly-introduced reporting requirements for commodity derivatives.

Stronger investor protection by:

improved disclosure to strengthen the best execution regime.

ESMA now has to adopt, where necessary, Level 3 measures (Guidelines, Q&As, etc) to provide guidance to the different stakeholders and ensure consistent implementation across the Union.

Technical advice

In addition, ESMA received a formal request from the European Commission on 23 April 2014 to provide technical advice to assist the European Commission on the possible content of the delegated acts required by several provisions of MiFID II/MiFIR. ESMA delivered its technical advice on 19 December 2014.

Monitoring, publications and reports

With the application of MiFID II/MiFIR (3 January 2018), ESMA will be responsible for many on-going duties including in particular the on-going publication of information on its website (e.g. reference data or volumes of trading executed under certain waivers for the purpose of the double volume cap mechanism), the production of reports in cooperation with the European Commission (e.g. on the functioning of OTF or SME growth markets) and the monitoring and publication of opinions of how certain provisions are implemented (e.g. implementation of position limits or use of pre-trade transparency waivers).

Opportunities and Challenges

End-user Accessing Markets

Market participants are likely to see how lower transaction costs,
More information to aid price formation and a narrowing of bid-offer spreads as a result of MiFID II / MiFIR.
They will need to consider how they access the market in future as the types of trading venues available and the firms that offer them change.

Investment Firms Providing Execution Services

MiFID II / MiFIR will affect the business models of firms that distribute financial instruments to investors via trading venues or on a bilateral basis e.g. investment banks or broker-dealers. There will be a restriction on the ability to provide OTC services as more trading activity is required to move to venues, reducing execution-related revenue. Profit margins may be squeezed further by potential pressure on transaction costs and a narrowing of bid ask spreads.
Investment firms dealing as principal will need to determine how they provide execution services to their clients. In future, clearing eligible sufficiently liquid derivatives will have to be offered to clients via OTFs and MTFs. While the OTF is designed for derivatives, operating them may not be a viable option for an investment bank as OTFs will not be permitted to execute orders against propitiatory capital (although matched principal trading will be allowed in certain circumstances). The same legal entity will not be permitted to operate both an OTF and an SI, which is likely to be a hindrance to firms that provide a variety of execution services in the same entity. In the US, none of the 24 temporary SEFs (or where registration is pending) is an investment bank.
Investment firms will also need to determine whether they meet the more comprehensive definition of an SI, including specified thresholds in relation to their dealing on a bilateral basis. They will also need to determine whether they are operating internal matching systems for equity and equity-like instruments on a multilateral basis which will require authorisation as an MTF under the new regime. Where they do meet these definitions, investment firms should access the the relative pros and cons of acting as an SI or seeking authorisation as an MTF, or changing or ceasing their trading activities in these areas.

Disclosure and Reporting

MiFID / MiFIR will bring extensive new disclosure and reporting requirements. With the expansion of the post-trade transparency regime to equity-like and non-equity instruments, operators of RMs and investment firms, including, in their operation of MTFs and OTFs, will need to make public, as close to real time as possible, post-trade information on a much wider range of financial instruments. The scope of the transaction reporting regime is also widened, from applying only to financial instruments admitted to trading on a RM to applying to financial instruments admitted to trading or traded on a TV. Investment firms will also need to include a wider range of data fields in their transaction reports to competent authorities, such as flags related to short sales, waivers and algorithmic trading. All this will require a re-design of existing systems.
Firms active in commodity markets will need to meet a number of new requirements. In particular, position reporting and disclosure requirements for commodity derivatives, emission allowances and derivatives of emission allowances are introduced for the first time. Operators of RMs, MTFs and OTFs will need to make public aggregated positions on a weekly basis and report a breakdown of positions to competent authorities on a daily basis in relation to trading outside of a TV, not only for positions held by the investment firm, but also those held by their clients, and the clients of their clients until the end client is reached. Members of RMs and MTFs and the clients of OTFs will also have to report positions to the operators of the TVs for instruments traded on those TVs, again also on behalf of their clients, their clients clients, until the end client is reached.

As regulators seek to get a better picture of activities and risks in financial markets, firms are facing increasing reporting and disclosure requirements from multiple pieces of regulation. Many investment firms are still getting to grips with the EMIR reporting regime for derivatives. And this won't be the end. Reporting requirements for securities lending and repos are also on the horizon under the proposed Regulation on reporting and transparency of securities financing transactions. Experience from EMIR demonstrates that despite long implementation lead-times, the scale of the challenge can be under-estimated.
All this is likely to require significant systems changes, rather than making changes in incremental fashion, investment firms should use MiFID II / MiFIR implementation to step back and assess the data and systems changes that are being driven by all upcoming regulation, leveraging existing EMIR reporting infrastructure as much as possible. Robust data governance will be imperative.

System, Processes and Controls

Investment firms will need to meet enhanced requirements relating to Algo and HFT, which build on existing ESMA guidelines for Systems and controls in an automated trading environment. The definition of Algo trading is quite broad and will capture a significant number of electronic systems. Investment firms will need to have effective systems and risk controls, business continuity arrangements, in place and ensure systems are fully tested and properly monitored. There will be record keeping requirements in relation to placed orders, cancellations, executed orders and quotes, and investment firms providing DEA to trading venues will need to have effective systems and controls to monitor client trading and to ensure clients comply with MiFID II rules and the rules of the trading venue. Firms that pursue a market making strategy will face additional obligations. These requirements are likely to be particularly burdensome for HFT firms brought into scope of MiFID II / MiFIR.
Operators of TVs will need to enhance their systems, processes and controls to comply with the new requirements. They will need to ensure that systems are resilient, have sufficient capacity, can ensure orderly trading and are fully tested. They must be able to temporarily halt or constrain trading (if there is a significant price movement), and in exceptional cases, cancel, vary or correct transactions. There are also additional obligations to Algo trading. Operators of TVs will have to adopt minimum tick sizes for equities, equity-like and other financial instruments for which further information is provided in ESMA technical standards. They will also face enhanced market surveillance requirements.

Market Infrastructure

Operators of TVs and CCPs will need to revise their systems and assess their business models in light of the rules of open access. However, transitional arrangements will mean that some firms will not need to do this from day one. They will need to consider how best they can retain and build market share once competition has opened up.
Changes to the post-trade transparency regime will provide opportunities for data reporting services providers. APAs will become increasingly important, and there will be the opportunity for data reporting services providers to set up a CTP. More widely, trade repositories are fast becoming an important part of the market infrastructure due to EMIR reporting requirements and new reporting requirements proposed under the Regulation on reporting and transparency of securities financing transactions. Trade repositories will want to consider how they can take advantage of the new regime under MiFID II / MiFIR.

Authorisation

There will also be broadened authorisation requirements. Data reporting services providers will need to become authorised in their operation of ARMs, APAs and CTPs. Investment firms seeking to operate OTFs will need to extend their authorisation. Firms not currently authorised but engaging in high-frequency algorithmic trading will fall into scope of MiFID II / MiFIR and hence need authorisation, a lengthy and complicated process. Firms must be able to demonstrate that they meet the authorisation requirements and ensure that they provide accurate information to regulators within the expected timeframe. Failing to get it right could ultimately result in the firm having to cease performing some or all of its services/activities.

Dissection of MiFID 2 Regulation broken down by 23 Business Functions from MiFID II (97) / MiFIR (55) Articles, Delegated Acts (92), ITS (1) and RTS (27)

Business Functions
1. Management (9/9) - 100% Complete
2. Compliance and Audit (15/15) - 100% Complete
3. Marketing (7/7) - 100% Complete
4. Product Development (0/2) - 0% Complete (ETA 10 Mins) (5pm) TBC later - mapping to Del Acts to be realigned
5. Client Services, Onboarding and Authorisation (0/20) - 0% Complete (ETA 100 Mins) (6:30pm)
6. Sales (0/10) - 0% Complete (ETA 50 Mins) (7:30pm)

7. Trading Venues, Systematic Internalisers and Regulated Markets (0/69) - 0% Complete (ETA 395 Mins)

8. Trading (0/19) - 0% Complete (ETA 95 Mins)

9. Credit Risk Management (0/3) - 0% Complete (ETA 15 Mins)

10. Market Risk Management (0/2) - 0% Complete (ETA 10 Mins)

11. Middle Office (0/2) - 0% Complete (ETA 10 Mins)

12. Product Control (0/1) - 0% Complete (ETA 5 Mins)

13. Finance (0/1) - 0% Complete (ETA 5 Mins)

14. Confirmations, Agreements and Reporting (0/10) - 0% Complete (ETA 50 Mins)

15. Operations (0/8) - 0% Complete (ETA 40 Mins)

16. Trade Event Management (0/2) - 0% Complete (ETA Mins)

17. Reconciliations (0/2) - 0% Complete (ETA 10 Mins)

18. Regulatory Reporting (See Technology Section)

19. Technology (0/21) - 0% Complete (ETA 105 Mins)

20. Data Reporting Services (0/11) - 0% Complete (ETA 160 Mins)

21. National Competent Authorities (0/41) - 0% Complete (ETA 205 Mins)

22. Investment Research (0/3) - 0% Complete (ETA 15 Mins)

23. Legal (0/2) - 0% Complete (ETA 10 Mins)

1. Management

Responsibility of senior management (Compliance BA)

Complete Management Capability Analysis as per CRD IV - Article 88

Detailed analysis of the Management Team and any governance structure that is required should the organisation warrant it.

MiFID II / MiFIR: Article 9

Firms must comply with Articles 88 and 91 of Directive 2013/36/EU in order to be authorised. Members of the management body of the firm may hold one additional non-executive directorship. The management body must have in place arrangements to ensure effect and prudent management of the firm including segregation of duties and prevention of conflicts of interest in order to protect the interests of its clients and the integrity of the market.

Delegated Act: Article 24
Investment firms shall, where appropriate and proportionate in view of the nature, scale and complexity of their business and the nature and range of investment services and activities undertaken in the course of that business, establish and maintain an internal audit function which is separate and independent from the other functions and activities of the investment firm and which has the following responsibilities:

(a) establish, implement and maintain an audit plan to examine and evaluate the adequacy and effectiveness of the investment firm's systems, internal control mechanisms and arrangements;

(b) issue recommendations based on the result of work carried out in accordance with point (a) and verify compliance with those recommendations;
(c) report in relation to internal audit matters in accordance with Article 25(2).

General organisational requirements (Compliance BA)

This is a list of best practice organisational requirements for the functioning of a financial services organisation

Document detailing Analysis of skills required for each job, Management's relevant experience and a commentary on each to ensure they are fit for purpose

MiFID II / MiFIR: Article 16

The investment firm must comply with the organisational requirements detailed in Articles 16 and 17 including policies and procedures to ensure compliance of the managers, employees and tied agents, prevention of conflicts of interest, new product approval and existing product characteristics and target markets.

Delegated Act: Article 21

1. Investment firms shall comply with the following organisational requirements:

(a) establish, implement and maintain decision-making procedures and an organisational structure which clearly and in documented manner specifies reporting lines and allocates functions and responsibilities;

(b) ensure that their relevant persons are aware of the procedures which must be followed for the proper discharge of their responsibilities;

(c) establish, implement and maintain adequate internal control mechanisms designed to secure compliance with decisions and procedures at all levels of the investment firm;

(d) employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them;

(e) establish, implement and maintain effective internal reporting and communication of information at all relevant levels of the investment firm;

(f) maintain adequate and orderly records of their business and internal organisation;

(g) ensure that the performance of multiple functions by their relevant persons does not and is not likely to prevent those persons from discharging any particular function soundly, honestly, and professionally.

When complying with the requirements set out in the this paragraph, investment firms shall take into account the nature, scale and complexity of the business of the firm, and the nature and range of investment services and activities undertaken in the course of that business.

2. Investment firms shall establish, implement and maintain systems and procedures that are adequate to safeguard the security, integrity and confidentiality of information, taking into account the nature of the information in question.

3. Investment firms shall establish, implement and maintain an adequate business continuity policy aimed at ensuring, in the case of an interruption to their systems and procedures, the preservation of essential data and functions, and the maintenance of investment services and activities, or, where that is not possible, the timely recovery of such data and functions and the timely resumption of their investment services and activities.

4. Investment firms shall establish, implement and maintain accounting policies and procedures that enable them, at the request of the competent authority, to deliver in a timely manner to the competent authority financial reports which reflect a true and fair view of their financial position and which comply with all applicable accounting standards and rules.

5. Investment firms shall monitor and, on a regular basis, evaluate the adequacy and effectiveness of their systems, internal control mechanisms and arrangements established in accordance with paragraphs 1 to 4, and take appropriate measures to address any deficiencies.

Remuneration policies and practices (Compliance BA)

Re-design of the Remuneration Strategy of the company to ensure client interests are aligned

Analysis of Remuneration policy, products traded, profitability profile of products and alignment of interests in new policy redesigned to enhance client service

Delegated Act: Article 27

1. Investment firms shall define and implement remuneration policies and practices under appropriate internal procedures taking into account the interests of all the clients of the firm, with a view to ensuring that clients are treated fairly and their interests are not impaired by the remuneration practices adopted by the firm in the short, medium or long term. Remuneration policies and practices shall be designed in such a way so as not to create a conflict of interest or incentive that may lead relevant persons to favour their own interests or the firm’s interests to the potential detriment of any client.

2. Investment firms shall ensure that their remuneration policies and practices apply to all relevant persons with an impact, directly or indirectly, on investment and ancillary services provided by the investment firm or on its corporate behaviour, regardless of the type of clients, to the extent that the remuneration of such persons and similar incentives may create a conflict of interest that encourages them to act against the interests of any of the firm’s clients.

3. The management body of the investment firm shall approve, after taking advice from the compliance function, the firm’s remuneration policy. The senior management of the investment firm shall be responsible for the day-to-day implementation of the remuneration policy and the monitoring of compliance risks related to the policy.

4. Remuneration and similar incentives shall not be solely or predominantly based on quantitative commercial criteria, and shall take fully into account appropriate qualitative criteria reflecting compliance with the applicable regulations, the fair treatment of clients and the quality of services provided to clients. A balance between fixed and variable components of remuneration shall be maintained at all times, so that the remuneration structure does not favour the interests of the investment firm or its relevant persons against the interests of any client.

Shareholder analysis (Compliance BA)

Firms must provide details of their shareholders and/or members, including the amount of their respective holdings.
If the authorities are not happy with the individuals with holdings they will advise the investment firm.

If the proportion of share holdings or voting rights in an investment firm is going to exceed the thresholds of 20%, 30% or 50% the relevant authority must be informed in writing.

MiFID II / MiFIR: Article 10
Firms must provide details of their shareholders and/or members, including the amount of their respective holdings.

If the authorities are not happy with the individuals with holdings they will advise the investment firm.

Authorisation to closely linked natural or legal person with an investment firm will only be granted if it will not put excessive supervisory effort on the competent authority.

MiFID II / MiFIR: Article 11

If the proportion of share holdings or voting rights in an investment firm is going to exceed the thresholds of 20%, 30% or 50% the relevant authority must be informed in writing.

Likewise if the proportion of share holdings or voting rights is to drop below the same thresholds.

If an investment firm is involved in underwriting of financial instruments, this will be considered as holdings within a firm.

All CAs must provide each other without delay all information of use for their assessments.

Each year investment firms must provide a list of the individuals, identifying their proportions of holdings and/or voting rights.

Purchaser assessment and assessment period (Compliance BA)

The authority will acknowledge receipt to the proposed acquirer within two days, informing them also of the expiry date for the assessment..

MiFID II / MiFIR: Article 12

The authority will acknowledge receipt to the proposed acquirer within two days, informing them also of the expiry date for the assessment..

The assessment period will run for a maximum of 60 days from the date of the written acknowledgement.

The authorities may request further information during the assessment period, but no later than the 50th working day during the assessment period.

If this occurs the assessment will be interrupted, any interruption can not exceed 20 working days. This can be extended by the authority to 30 days subject to certain criteria being met.

MiFID II / MiFIR: Article 13

The proposed acquisition notification of the acquirer will be assessed on the below criteria :-

1) Reputation of acquirer

2) Experience of the individual that will run the investment firm

3) Financial acumen of the proposed acquirer

4) The investment firm will continue to comply with the prudential requirements based on this Directive, particular Directive 2002/87/EC (Financial Conglomerates Directive) and 2013/36/EU (CRD IV)

5) There is no money laundering or terrorist financing currently or increased risk in the future by the proposed acquisition.

Meaning of critical and important operational functions (Compliance BA)

An operational function shall be regarded as critical or important if a defect or failure in its performance would materially impair the continuing compliance of an investment firm with the conditions and obligations of its authorisation or its other obligations under Directive 2014/65/EU, or its financial performance, or the soundness or the continuity of its investment services and activities.

Delegated Act: Article 30

1. For the purposes of the first subparagraph of Article 16(5) of Directive 2014/65/EU, an operational function shall be regarded as critical or important where a defect or failure in its performance would materially impair the continuing compliance of an investment firm with the conditions and obligations of its authorisation or its other obligations under Directive 2014/65/EU, or its financial performance, or the soundness or the continuity of its investment services and activities.

2. Without prejudice to the status of any other function, the following functions shall not be considered as critical or important for the purposes of paragraph 1:

(a) the provision to the firm of advisory services, and other services which do not form part of the investment business of the firm, including the provision of legal advice to the firm, the training of personnel of the firm, billing services and the security of the firm's premises and personnel;

(b) the purchase of standardised services, including market information services and the provision of price feeds.

Conditions for outsourcing critical or important operational functions or investment services or activities (Compliance BA)

Investment firms outsourcing critical or important operational functions or any investment services or activities shall remain fully responsible for discharging all of their obligations under Directive 2014/65/EU and comply, in particular, with the following conditions:

Delegated Act: Article 31

1. Investment firms outsourcing critical or important operational functions shall remain fully responsible for discharging all of their obligations under Directive 2014/65/EU and shall comply with the following conditions:

(a) the outsourcing does not result in the delegation by senior management of its responsibility;

(b) the relationship and obligations of the investment firm towards its clients under the terms of Directive 2014/65/EU is not altered;

(c) the conditions with which the investment firm must comply in order to be authorised in accordance with Article 5 of Directive 2014/65/EU, and to remain so, are not undermined;

(d) none of the other conditions subject to which the firm's authorisation was granted is removed or modified.

2. Investment firms shall exercise due skill, care and diligence when entering into, managing or terminating any arrangement for the outsourcing to a service provider of critical or important operational functions and shall take the necessary steps to ensure that the following conditions are satisfied:

(a) the service provider has the ability, capacity, sufficient resources, appropriate organisational structure supporting the performance of the outsourced functions, and any authorisation required by law to perform the outsourced functions, reliably and professionally;

(b) the service provider carries out the outsourced services effectively and in compliance with applicable law and regulatory requirements, and to this end the firm has established methods and procedures for assessing the standard of performance of the service provider and for reviewing on an ongoing basis the services provided by the service provider;

(c) the service provider properly supervises the carrying out of the outsourced functions, and adequately manage the risks associated with the outsourcing;

(d) appropriate action is taken where it appears that the service provider may not be carrying out the functions effectively or in compliance with applicable laws and regulatory requirements;

(e) the investment firm effectively supervises the outsourced functions or services and manage the risks associated with the outsourcing and to this end the firm retains the necessary expertise and resources to supervise the outsourced functions effectively and manage those risks;

(f) the service provider has disclosed to the investment firm any development that may have a material impact on its ability to carry out the outsourced functions effectively and in compliance with applicable laws and regulatory requirements;

(g) the investment firm is able to terminate the arrangement for outsourcing where necessary, with immediate effect when this is in the interests of its clients, without detriment to the continuity and quality of its provision of services to clients;

(h) the service provider cooperates with the competent authorities of the investment firm in connection with the outsourced functions;

(i) the investment firm, its auditors and the relevant competent authorities have effective access to data related to the outsourced functions, as well as to the relevant business premises of the service provider, where necessary for the purpose of effective oversight in accordance with this article, and the competent authorities are able to exercise those rights of access;

(j) the service provider protects any confidential information relating to the investment firm and its clients;

(k) the investment firm and the service provider have established, implemented and maintained a contingency plan for disaster recovery and periodic testing of backup facilities, where that is necessary having regard to the function, service or activity that has been outsourced;

(l) the investment firm has ensured that the continuity and quality of the outsourced functions or services are maintained also in the event of termination of the outsourcing either by transferring the outsourced functions or services to another third party or by performing them itself.

3. The respective rights and obligations of the investment firms and of the service provider shall be clearly allocated and set out in a written agreement. In particular, the investment firm shall keep its instruction and termination rights, its rights of information, and its right to inspections and access to books and premises. The agreement shall ensure that outsourcing by the service provider only takes place with the consent, in writing, of the investment firm.

4. Where the investment firm and the service provider are members of the same group, the investment firm may, for the purposes of complying with this Article and Article 32, take into account the extent to which the firm controls the service provider or has the ability to influence its actions.

5. Investment firms shall make available on request to the competent authority all information necessary to enable the authority to supervise the compliance of the performance of the outsourced functions with the requirements of Directive 2014/65/EU and its implementing measures.

Service providers located in third country firms (Compliance BA)

In addition to the requirements set out in Article 31, where an investment firm outsources the investment service of portfolio management provided to clients to a service provider located in a third country, that investment firm ensures that the following conditions are satisfied:

Delegated Act: Article 32

1. In addition to the requirements set out in Article 31, where an investment firm outsources functions related to the investment service of portfolio management provided to clients to a service provider located in a third country, that investment firm ensures that the following conditions are satisfied:

(a) the service provider is authorised or registered in its home country to provide that service and is effectively supervised by a competent authority in that third country;

(b) there is an appropriate cooperation agreement between the competent authority of the investment firm and the supervisory authority of the service provider.

2. The cooperation agreement referred to in point (b) of paragraph 1 shall ensure that the competent authorities of the investment firm are able, at least, to:

(a) obtain on request the information necessary to carry out their supervisory tasks pursuant to Directive 2014/65/EU and Regulation (EU) No 600/2014;

(b) obtain access to the documents relevant for the performance of their supervisory duties maintained in the third country;

(c) receive information from the supervisory authority in the third country as soon as possible for the purpose of investigating apparent breaches of the requirements of Directive 2014/65/EU and its implementing measures and Regulation (EU) No 600/2014;

(d) cooperate with regard to enforcement, in accordance with the national and international law applicable to the supervisory authority of the third country and the competent authorities in the Union in cases of breach of the requirements of Directive 2014/65/EU and its implementing measures and relevant national law.

3. Competent authorities shall publish on their website a list of the supervisory authorities in third countries with which they have a cooperation agreement referred to in point (b) of paragraph 1.

Competent authorities shall update cooperation agreements concluded before the date of entry into application of this Regulation within six months from that date.

MiFID II Project Plan (Compliance BA)

Need to ensure that management understand the implications of not being on top of MIFID II and putting structure in place to ensure that they are engaged and on top of it

MiFID II / MiFIR: Article 69

Competent Authorities will be given all supervisory and investigative powers to ensure that they meet the directive and regulations.

The article provides a minimum list of powers such as access to documents and data, on-site inspections, freezing of assets etc.

Output: MiFID II Programme / Project Plan

2. Compliance and Audit

Compliance and administering of MiFID II (Compliance BA)

Awareness about their responsibilities & Understand the consequences

Detail the new supervisory powers

MiFID II / MiFIR: Article 69

Competent Authorities will be given all supervisory and investigative powers to ensure that they meet the directive and regulations.

The article provides a minimum list of powers such as access to documents and data, on-site inspections, freezing of assets etc.

Output: Signed document ensuring that the Compliance function/Management have taken responsibility for the implementation of MIFID II.

Compliance policies and procedures (Compliance BA)

Review to ensure that all the compliance structures - based on prior compliance regulation

Delegated Act: Article 22

1. Investment firms shall establish, implement and maintain adequate policies and procedures designed to detect any risk of failure by the firm to comply with its obligations under Directive 2014/65/EU, as well as the associated risks, and put in place adequate measures and procedures designed to minimise such risk and to enable the competent authorities to exercise their powers effectively under that Directive.

For those purposes, investment firms shall take into account the nature, scale and complexity of the business of the firm, and the nature and range of investment services and activities undertaken in the course of that business. Investment firms shall establish and maintain a permanent and effective compliance function which operates independently and which has the following responsibilities:

(a) to monitor on a permanent basis and to assess, on a regular basis, the adequacy and effectiveness of the measures, policies and procedures put in place in accordance with the first subparagraph of paragraph 1, and the actions taken to address any deficiencies in the firm's compliance with its obligations;

(b) to advise and assist the relevant persons responsible for carrying out investment services and activities to comply with the firm's obligations under Directive 2014/65/EU;

(c) to report to the management body, at least annually, on the implementation and effectiveness of the overall control environment for investment services and activities, on the risks that have been identified and on the complaints-handling reporting as well as remedies undertaken or to be undertaken;

(d) to monitor the operations of the complaints-handling process and consider complaints as a source of relevant information in the context of its general monitoring responsibilities.

In order to comply with points (a) and (b) of paragraph 2, the compliance function shall conduct an assessment on the basis of which it shall establish a risk-based monitoring programme that takes into consideration all areas of the investment firm’s investment services, activities and any relevant ancillary services, including relevant information gathered in relation to the monitoring of complaints handling. The monitoring programme shall establish priorities determined by the compliance risk assessment ensuring that compliance risk is comprehensively monitored.

In order to enable the compliance function to discharge its responsibilities properly and independently, investment firms shall ensure that the following conditions are satisfied:

(a) the compliance function must have the necessary authority, resources, expertise and access to all relevant information;

(b) a compliance officer must be appointed and replaced by the management body and must be responsible for the compliance function and for any reporting as to compliance required by Directive 2014/65/EU and Article 24(2) of this Regulation;

(c) the compliance function must be enabled to report on an ad-hoc basis directly to the management body whenever it has detected a significant risk of failure by the firm to comply with its obligations under Directive 2014/65/EU;

(d) the relevant persons involved in the compliance function must not be involved in the performance of services or activities they monitor;

(e) the method of determining the remuneration of the relevant persons involved in the compliance function must not compromise their objectivity and must not be likely to do so.

However, an investment firm shall not be required to comply with point (d) or point (e) if it is able to demonstrate that in view of the nature, scale and complexity of its business, and the nature and range of investment services and activities, the requirement under that point is not proportionate and that its compliance function continues to be effective. In such case, the investment firm must assess whether the effectiveness of the compliance function is compromised. This assessment must be reviewed on a regular basis.

Conflict of interest review (Compliance BA)

Full conflict of interest analysis

Additional requirements in relation to pricing of offerings in relation to issuance of financial instruments

Delegated Act: Article 39

1. Investment firms shall have in place systems, controls and procedures to identify and prevent or manage conflicts of interest that arise in relation to possible under-pricing or over-pricing of an issue or involvement of relevant parties in the process. In particular, investment firms shall as a minimum requirement establish, implement and maintain internal arrangements to ensure both of the following:

(a) that the pricing of the offer does not promote the interests of other clients or firm’s own interests, in a way that may conflict with the issuer client's interests; and

(b) the prevention or management of a situation where persons responsible for providing services to the firm's investment clients are directly involved in decisions about corporate finance advice on pricing to the issuer client.

2. Investment firms shall provide clients with information about how the recommendation as to the price of the offering and the timings involved is determined. In particular, the firm shall inform and engage with the issuer client about any hedging or stabilisation strategies it intends to undertake with respect to the offering, including how these strategies may impact the issuer clients' interests. During the offering process, firms shall also take all reasonable steps to keep the issuer client informed about developments with respect to the pricing of the issue.

Additional requirements in relation to placing

Delegated Act: Article 40

1. Investment firms placing financial instruments shall establish, implement and maintain effective arrangements to prevent recommendations on placing from being inappropriately influenced by any existing or future relationships.

2. Investment firms shall establish, implement and maintain effective internal arrangements to prevent or manage conflicts of interests that arise where persons responsible for providing services to the firm's investment clients are directly involved in decisions about recommendations to the issuer client on allocation.

3. Investment firms shall not accept any third-party payments or benefits unless such payments or benefits comply with the inducements requirements laid down in Article 24 of Directive 2014/65/EU. In particular, the following practices shall be considered not compliant with those requirements and shall therefore be considered not acceptable:

(a) an allocation made to incentivise the payment of disproportionately high fees for unrelated services provided by the investment firm ('laddering'), such as disproportionately high fees or commissions paid by an investment client, or disproportionately high volumes of business at normal levels of commission provided by the investment client as a compensation for receiving an allocation of the issue;

(b) an allocation made to a senior executive or a corporate officer of an existing or potential issuer client, in consideration for the future or past award of corporate finance business ('spinning');

(c) an allocation that is expressly or implicitly conditional on the receipt of future orders or the purchase of any other service from the investment firm by an investment client, or any entity of which the investor is a corporate officer.

4. Investment firms shall establish, implement and maintain an allocation policy that sets out the process for developing allocation recommendations. The allocation policy shall be provided to the issuer client before agreeing to undertake any placing services. The policy shall set out relevant information that is available at that stage, about the proposed allocation methodology for the issue.

5. Investment firms shall involve the issuer client in discussions about the placing process in order for the firm to be able to understand and take into account the client's interests and objectives. The investment firm shall obtain the issuer client's agreement to its proposed allocation per type of client for the transaction in accordance with the allocation policy.

Additional requirements in relation to advice, distribution and self-placement
Delegated Act: Article 41
1. Investment firms shall have in place systems, controls and procedures to identify and manage the conflicts of interest that arise when providing investment service to an investment client to participate in a new issue, where the investment firm receives commissions, fees or any monetary or non-monetary benefits in relation to arranging the issuance. Any commissions, fees or monetary or non-monetary benefits shall comply with the requirements in Article 24(7), 24(8) and 24(9) of Directive 2014/65/EU and be documented in the investment firm's conflicts of interest policies and reflected in the firm's inducements arrangements.

2. Investment firms engaging in the placement of financial instruments issued by themselves or by entities within the same group, to their own clients, including their existing depositor clients in the case of credit institutions, or investment funds managed by entities of their group, shall establish, implement and maintain clear and effective arrangements for the identification, prevention or management of the potential conflicts of interest that arise in relation to this type of activity. Such arrangements shall include consideration of refraining from engaging in the activity, where conflicts of interest cannot be appropriately managed so as to prevent any adverse effects on clients.

3. When disclosure of conflicts of interest is required, investment firms shall comply with the requirements in Article 34(4), including an explanation of the nature and source of the conflicts of interest inherent to this type of activity, providing details about the specific risks related to such practices in order to enable clients to make an informed investment decision.

4. Investment firms engaging in the offering of financial instruments issued by themselves or other group entities to their clients and those instruments are included in the calculation of prudential requirements specified in Regulation (EU) No 575/2013 of the European Parliament and of the Council 20, Directive 2013/36/EU of the European Parliament and of the Council 21 or Directive 2014/59/EU of the European Parliament and of the Council 22, shall provide such clients with additional information explaining the differences between the financial instrument and bank deposits in terms of yield, risk, liquidity and any protection provided in accordance with Directive 2014/49/EU of the European Parliament and of the Council.

Output: Completed Conflict of Interest Analysis of the Organisation and its employees. Review of inducements to ensure no conflicts of interest.

Trading process and finalisation of transactions in an MTF and an OTF

Firms operating an MTF and OTF will have transparent rules for fair and orderly trading in place as well as sound technical operating arrangements to avoid system disruption

MiFID II / MiFIR: Article 18

Firms operating an MTF and OTF will have transparent rules for fair and orderly trading in place as well as sound technical operating arrangements to avoid system disruption. They should have clear rules regarding what instruments can be traded, clear investor information, non-discriminatory access to the facility, have at least 3 users, comply with Articles 48 and 49.

Specific requirements for MTFs

Firms operating an MTF will implement non-discriminatory rules for execution of orders in the system

MiFID II / MiFIR: Article 19

Firms operating an MTF will implement non-discriminatory rules for execution of orders in the system. They will have in place arrangements to: mitigate any risks to the operation of the system, ensure efficient and timely execution of orders, and sufficient financial resources in place. They will not execute client orders using proprietary capital or engage in matched principal trading.

Specific requirements for OTFs

Firms operating as an OTF cannot execute client orders against their proprietary capital

MiFID II / MiFIR: Article 20

Firms operating as an OTF cannot execute client orders against their proprietary capital. A firm may be permitted to engage in matched principal trading in bonds, structured finance products, emission allowances and certain derivatives only where the client has consented to the process.

Ensure compliance with TVs

Monitoring of compliance with the rules of the MTF or the OTF and with other legal obligations

MiFID II / MiFIR: Article 31

Investment firms and market operators operating as an MTF or OTF should establish and maintain effective arrangements and procedures for the regular monitoring of compliance by it's members or participants or users of these rules.

Investment firms should have effective monitoring to detect any infringements to the rules, disorderly trading conditions or system disruption.

Suspension of a product from trading at a TV

Suspension or removal from trading a financial instrument which no longer complies with the rules of the MTF/OTF

MiFID II / MiFIR: Article 32

An investment firm or a market operator operating an MTF or an OTF may suspend or remove from trading a financial instrument which no longer complies with the rules of the MTF or OTF unless the suspension or removal would likely cause significant damage to the investors' interest or the orderly functioning of the market.

Also, any associated derivative instrument to the financial instrument will need to be removed or suspended in trading.

Such decisions should be made public to the relevant authorities.

Additionally, any other MTF, OTF and systematic internalisers trading in the same financial instrument or derivatives must also suspend and remove that financial instrument or derivative from trading.

Ensure complaints handling function is set-up (Compliance BA)

Complaints handling

Delegated Act: Article 26

1. Investment firms shall establish, implement and maintain effective and transparent complaints management policies and procedures for the prompt handling of clients’ or potential clients’ complaints. Investment firms shall keep a record of the complaints received and the measures taken for their resolution.

The complaints management policy shall provide clear, accurate and up-to-date information about the complaints-handling process. This policy shall be endorsed by the firm’s management body.

2. Investment firms shall publish the details of the process to be followed when handling a complaint. Such details shall include information about the complaints management policy and the contact details of the complaints management function. The information shall be provided to clients or potential clients, on request, or when acknowledging a complaint. Investment firms shall enable clients and potential clients to submit complaints free of charge.

3. Investment firms shall establish a complaints management function responsible for the investigation of complaints. This function may be carried out by the compliance function.

4. When handling a complaint, investment firms shall communicate with clients or potential clients clearly, in plain language that is easy to understand and shall reply to the complaint without undue delay.

5. Investment firms shall communicate the firm’s position on the complaint to clients or potential clients and inform the clients or potential clients about their options, including that they may be able to refer the complaint to an alternative dispute resolution entity, as defined in Article 4(h) of Directive 2013/11/EU of the European Parliament and the Council on consumer ADR or that the client may be able to take civil action.

6. Investment firms shall provide information on complaints and complaints-handling to the relevant competent authorities and, where applicable under national law, to an alternative dispute resolution (ADR) entity.

7. Investment firms’ compliance function shall analyse complaints and complaints- handling data to ensure that they identify and address any risks or issues.

Output: Completed Complaints procedure (Customer Care Team)

Review of all the audit functions, policies and procedures (Compliance BA)

Risk management audit, policies and procedures

Delegated Act: Article 23

1. Investment firms shall take the following actions relating to risk management:

(a) establish, implement and maintain adequate risk management policies and procedures which identify the risks relating to the firm's activities, processes and systems, and where appropriate, set the level of risk tolerated by the firm;

(b) adopt effective arrangements, processes and mechanisms to manage the risks relating to the firm's activities, processes and systems, in light of that level of risk tolerance;

(c) monitor the following:

(i) the adequacy and effectiveness of the investment firm's risk management policies and procedures;

(ii) the level of compliance by the investment firm and its relevant persons with the arrangements, processes and mechanisms adopted in accordance with point (b);

(iii) the adequacy and effectiveness of measures taken to address any deficiencies in those policies, procedures, arrangements, processes and mechanisms, including failures by the relevant persons to comply with such arrangements, processes and mechanisms or follow such policies and procedures.

2. Investment firms shall, where appropriate and proportionate in view of the nature, scale and complexity of their business and the nature and range of the investment services and activities undertaken in the course of that business, establish and maintain a risk management function that operates independently and carries out the following tasks:

(a) implementation of the policy and procedures referred to in paragraph 1;

(b) provision of reports and advice to senior management in accordance with Article 25(2).

Where an investment firm does not establish and maintain a risk management function under the first sub-paragraph, it shall be able to demonstrate upon request that the policies and procedures which it is has adopted in accordance with paragraph 1 satisfy the requirements therein.

Definition of personal transactions and the implementation of controls around them (Compliance BA)

Scope of personal transactions

Delegated Act: Article 28
For the purposes of Article 29 and Article 37, a personal transaction shall be a trade in a financial instrument effected by or on behalf of a relevant person, where at least one of the following criteria are met:

(a) the relevant person is acting outside the scope of the activities he carries out in his professional capacity;

(b) the trade is carried out for the account of any of the following persons:

(i) the relevant person;

(ii) any person with whom he has a family relationship, or with whom he has close links;
(iii) a person in respect of whom the relevant person has a direct or indirect material interest in the outcome of the trade, other than obtaining a fee or commission for the execution of the trade.

Personal transactions
Delegated Act: Article 29

1. Investment aimed at preventing the activities set out in paragraphs 2, 3 and 4 in the case of any relevant person who is involved in activities that may give rise to a conflict of interest, or who has access to inside information within the meaning of Article 7(1) of Regulation (EU) No 596/2014 or to other confidential information relating to clients or transactions with or for clients by virtue of an activity carried out by him on behalf of the firm.

2. Investment firms shall ensure that relevant persons do not enter into a personal transaction which meets at least one of the following criteria:

(a) that person is prohibited from entering into it under Regulation (EU) No 596/2014;

(b) it involves the misuse or improper disclosure of that confidential information;

(c) it conflicts or is likely to conflict with an obligation of the investment firm under Directive 2014/65/EU.

3. Investment firms shall ensure that relevant persons do not advise or recommend, other than in the proper course of employment or contract for services, any other person to enter into a transaction in financial instruments which, if it were a personal transaction of the relevant person, would be covered by paragraph 2 or Article 37(2)(a) or (b) or Article 67(3).

4. Without prejudice to Article 10(1) of Regulation (EU) No 596/2014, investment firms shall ensure that relevant persons do not disclose, other than in the normal course of his employment or contract for services, any information or opinion to any other person where the relevant person knows, or reasonably ought to know, that as a result of that disclosure that other person will or would be likely to take either of the following steps:

firms shall establish, implement and maintain adequate arrangements:

(a) to enter into a transaction in financial instruments which, if it were a personal transaction of the relevant person, would be covered by paragraphs 2 or 3 or Article 37(2)(a) or (b) or Article 67(3);

(b) to advise or procure another person to enter into such a transaction.

5. The arrangements required under paragraph 1 shall be designed to ensure that:

(a) each relevant person covered by paragraphs 1, 2, 3 and 4 is aware of the restrictions on personal transactions, and of the measures established by the investment firm in connection with personal transactions and disclosure, in accordance with paragraphs 1, 2,3 and 4.

(b) the firm is informed promptly of any personal transaction entered into by a relevant person, either by notification of that transaction or by other procedures enabling the firm to identify such transactions;

(c) a record is kept of the personal transaction notified to the firm or identified by it, including any authorisation or prohibition in connection with such a transaction.

In the case of outsourcing arrangements, the investment firm shall ensure that the firm to which the activity is outsourced maintains a record of personal transactions entered into by any relevant person and provides that information to the investment firm promptly on request.

6. Paragraphs 1 to 5 shall not apply to the following personal transactions:

(a) personal transactions effected under a discretionary portfolio management service where there is no prior communication in connection with the transaction between the portfolio manager and the relevant person or other person for whose account the transaction is executed;

(b) personal transactions in undertakings for collective investments in transferable securities (UCITS) or AIFs that are subject to supervision under the law of a Member State which requires an equivalent level of risk spreading in their assets, where the relevant person and any other person for whose account the transactions are effected are not involved in the management of that undertaking.

Consultation procedure review (Compliance BA)

General Principle and information to clients

MiFID II / MiFIR: Article 24

National regulators to require investment firms act in the best interest of the client

Investment firms to ensure the instruments are compatible with the clients needs and are offered only when in the interest of the client.
Investment firms to disclose whether the advice provided is independent, whether it is based on broad or more restricted analysis of financial instruments, whether the investment firm will provide periodic review of the suitability of instruments recommended to the client, to provide all-in cost and breakdown of any fees, associated risks.

Provision of investment service in an incidental manner

Delegated Act: Article 4

For the purpose of the exemption in point (c) of Article 2(1) of Directive 2014/65/EU, an investment service shall be deemed to be provided in an incidental manner in the course of a professional activity where the following conditions are satisfied:

(a) a close and factual connection exists between the professional activity and the provision of the investment service to the same client, such that the investment service can be regarded as accessory to the main professional activity;

(b) the provision of investment services to the clients of the main professional activity does not aim to provide a systematic source of income to the person providing the professional activity; and

(c) the person providing the professional activity does not market or otherwise promote his ability to provide investment services, except where these are disclosed to clients as being accessory to the main professional activity.

Output: Signed off Document from Mgt that we are covered by MIFID II

Membership of an authorised investor compensation scheme

Authorisation meeting obligation

MiFID II / MiFIR: Article 14

The competent authority will verify that the entity seeking authorisation meets its obligations under Directive 97/9/EC. Obligations regarding structured deposits used by a credit institution are specified in paragraph 1 of this directive.

Initial capital endowment

Authorisation based on sufficient capital

MiFID II / MiFIR: Article 15

Member States must ensure that authorisation is not granted unless the firm has sufficient capital in accordance with Regulation (EU) No 575/2013

Criteria of commodity trading being ancillary to main business
This is covered in RTS 20 (Project 20.1)

3. Marketing

Fair, clear and not misleading information (BA, Comms Team, Sales and Marketing)
Review of all the sales material to ensure that it complies with all the regulation - font size, etc
Delegated Act: Article 44

1. Investment firms shall ensure that all information they address to, or disseminate in such a way that it is likely to be received by, retail or professional clients or potential retail or professional clients, including marketing communications, satisfies the conditions laid down in paragraphs 2 to 8.

2. Investment firm shall ensure that the information referred to in paragraph 1 complies with the following conditions:

(a) the information includes the name of the investment firm,

(b) the information is accurate and always gives a fair and prominent indication of any relevant risks when referencing any potential benefits of an investment service or financial instrument,

(c) the information uses a font size in the indication of relevant risks that is at least equal to the predominant font size used throughout the information provided, as well as a layout ensuring such indication is prominent,

(d) the information is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to whom it is directed, or by whom it is likely to be received,

(e) the information does not disguise, diminish or obscure important items, statements or warnings,

(f) the information is consistently presented in the same language throughout all forms of information and marketing materials that are provided to each client, unless the client has accepted to receive information in more than one language,

(g) the information is up-to-date and relevant to the means of communication used.

3. Where the information compares investment or ancillary services, financial instruments, or persons providing investment or ancillary services, investment firms shall ensure that the following conditions are satisfied:

(a) the comparison is meaningful and presented in a fair and balanced way;

(b) the sources of the information used for the comparison are specified;

4. Where the information contains an indication of past performance of a financial instrument, a financial index or an investment service, investment firms shall ensure that the following conditions are satisfied:

(a) that indication is not the most prominent feature of the communication;

(b) the information must include appropriate performance information which covers the preceding 5 years, or the whole period for which the financial instrument has been offered, the financial index has been established, or the investment service has been provided where less than five years, or such longer period as the firm may decide, and in every case that performance information is based on complete 12-month periods;

(d) the information contains a prominent warning that the figures refer to the past and that past performance is not a reliable indicator of future results;

(e) where the indication relies on figures denominated in a currency other than that of the Member State in which the retail client or potential retail client is resident, the currency is clearly stated, together with a warning that the return may increase or decrease as a result of currency fluctuations;

(f) where the indication is based on gross performance, the effect of commissions, fees or other charges are disclosed.

5. Where the information includes or refers to simulated past performance, investment firms shall ensure that the information relates to a financial instrument or a financial index, and the following conditions are satisfied:

(a) the simulated past performance is based on the actual past performance of one or more financial instruments or financial indices which are the same as, or substantially the same as, or underlie, the financial instrument concerned;

(b) in respect of the actual past performance referred to in point (a), the conditions set out in points (a) to (c), (e) and (f) of paragraph 4 are satisfied;

(c) the information contains a prominent warning that the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

6. Where the information contains information on future performance, investment firms shall ensure that the following conditions are satisfied:

(a) the information is not based on or refer to simulated past performance;

(b) the information is based on reasonable assumptions supported by objective data;

(d) the information is based on performance scenarios in different market conditions (both negative and positive scenarios), and reflects the nature and risks of the specific types of instruments included in the analysis;

(e) the information contains a prominent warning that such forecasts are not a reliable indicator of future performance.

7. Where the information refers to a particular tax treatment, it shall prominently state that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

8. The information shall not use the name of any competent authority in such a way that would indicate or suggest endorsement or approval by that authority of the products or services of the investment firm.

Information about the investment firm and its services for clients and potential clients (BA, Comms Team, Sales and Marketing)

Delegated Act: Article 47
1. Investment firms shall provide clients or potential clients with the following general information, where relevant:

(a) the name and address of the investment firm, and the contact details necessary to enable clients to communicate effectively with the firm;

(b) the languages in which the client may communicate with the investment firm, and receive documents and other information from the firm;

(c) the methods of communication to be used between the investment firm and the client including, where relevant, those for the sending and reception of orders;

(d) a statement of the fact that the investment firm is authorised and the name and contact address of the competent authority that has authorised it;

(e) where the investment firm is acting through a tied agent, a statement of this fact specifying the Member State in which that agent is registered;

(f) the nature, frequency and timing of the reports on the performance of the service to be provided by the investment firm to the client in accordance with Article 25(6) of Directive 2014/65/EU;

(g) where the investment firm holds client financial instruments or client funds, a summary description of the steps which it takes to ensure their protection, including summary details of any relevant investor compensation or deposit guarantee scheme which applies to the firm by virtue of its activities in a Member State;

(h) a description, which may be provided in summary form, of the conflicts of interest policy maintained by the firm in accordance with Article 34;

(i) at the request of the client, further details of that conflicts of interest policy in a durable medium or by means of a website (where that does not constitute a durable medium) provided that the conditions set out Article 3(2) are satisfied.

The information listed in points (a) to (i) shall be provided in good time before the provision of investment services or ancillary services to clients or potential clients.

2. When providing the service of portfolio management, investment firms shall establish an appropriate method of evaluation and comparison such as a meaningful benchmark, based on the investment objectives of the client and the types of financial instruments included in the client portfolio, so as to enable the client for whom the service is provided to assess the firm's performance.

3. Where investment firms propose to provide portfolio management services to a client or potential client, they shall provide the client, in addition to the information required under paragraph 1, with such of the following information as is applicable:

(a) information on the method and frequency of valuation of the financial instruments in the client portfolio;

(b) details of any delegation of the discretionary management of all or part of the financial instruments or funds in the client portfolio;

(d) the types of financial instrument that may be included in the client portfolio and types of transaction that may be carried out in such instruments, including any limits;

(e) the management objectives, the level of risk to be reflected in the manager's exercise of discretion, and any specific constraints on that discretion.

The information listed in points (a) to (e) shall be provided in good time before the provision of investment services or ancillary services to clients or potential clients.

Information about financial instruments (BA, Comms Team, Sales and Marketing)

Delegated Act: Article 48
1. Investment firms shall provide clients or potential clients in good time before the provision of investment services or ancillary services to clients or potential clients with a general description of the nature and risks of financial instruments, taking into account, in particular, the client's categorisation as either a retail client, professional client or eligible counter-party. That description shall explain the nature of the specific type of instrument concerned, the functioning and performance of the financial instrument in different market conditions, including both positive and negative conditions, as well as the risks particular to that specific type of instrument in sufficient detail to enable the client to take investment decisions on an informed basis.
2. The description of risks referred to in paragraph 1 shall include, where relevant to the specific type of instrument concerned and the status and level of knowledge of the client, the following elements:
(a) the risks associated with that type of financial instrument including an explanation of leverage and its effects and the risk of losing the entire investment including the risks associated with insolvency of the issuer or related events, such as bail in;
(b) the volatility of the price of such instruments and any limitations on the available market for such instruments;
(c) information on impediments or restrictions for disinvestment, for example as may be the case for illiquid financial instruments or financial instruments with a fixed investment term, including an illustration of the possible exit methods and consequences of any exit, possible constraints and the estimated time frame for the sale of the financial instrument before recovering the initial costs of the transaction in that type of financial instruments;
(d) the fact that an investor might assume, as a result of transactions in such instruments, financial commitments and other additional obligations, including contingent liabilities, additional to the cost of acquiring the instruments;
(e) any margin requirements or similar obligations, applicable to instruments of that type.
3. Where an investment firm provides a retail client or potential retail client with information about a financial instrument that is the subject of a current offer to the public and a prospectus has been published in connection with that offer in accordance with Directive 2003/71/EC, that firm shall in good time before the provision of investment services or ancillary services to clients or potential clients inform the client or potential client where that prospectus is made available to the public.
4. Where a financial instrument is composed of two or more different financial instruments or services, the investment firm shall provide an adequate description of the legal nature of the financial instrument, the components of that instrument and the way in which the interaction between the components affects the risks of the investment.
5. In the case of financial instruments that incorporate a guarantee or capital protection, the investment firm shall provide a client or a potential client with information about the scope and nature of such guarantee or capital protection. When the guarantee is provided by a third party, information about the guarantee shall include sufficient detail about the guarantor and the guarantee to enable the client or potential client to make a fair assessment of the guarantee.

Information requirements concerning safeguarding of client financial instruments or client funds (BA, Comms Team, Sales and Marketing)

Delegated Act: Article 49

1. Investment firms holding financial instruments or funds belonging to clients shall provide those clients or potential clients with the information specified in paragraphs 2 to 7 where relevant.

2. The investment firm shall inform the client or potential client where the financial instruments or funds of that client may be held by a third party on behalf of the investment firm and of the responsibility of the investment firm under the applicable national law for any acts or omissions of the third party and the consequences for the client of the insolvency of the third party.

3. Where financial instruments of the client or potential client may, if permitted by national law, be held in an omnibus account by a third party, the investment firm shall inform the client of this fact and shall provide a prominent warning of the resulting risks.

4. The investment firm shall inform the client or potential client where it is not possible under national law for client financial instruments held with a third party to be separately identifiable from the proprietary financial instruments of that third party or of the investment firm and shall provide a prominent warning of the resulting risks.

5. The investment firm shall inform the client or potential client where accounts that contain financial instruments or funds belonging to that client or potential client are or will be subject to the law of a jurisdiction other than that of a Member State and shall indicate that the rights of the client or potential client relating to those financial instruments or funds may differ accordingly.

6. An investment firm shall inform the client about the existence and the terms of any security interest or lien which the firm has or may have over the client's financial instruments or funds, or any right of set-off it holds in relation to those instruments or funds. Where applicable, it shall also inform the client of the fact that a depository may have a security interest or lien over, or right of set-off in relation to those instruments or funds.

7. An investment firm, before entering into securities financing transactions in relation to financial instruments held by it on behalf of a client, or before otherwise using such financial instruments for its own account or the account of another client shall in good time before the use of those instruments provide the client, in a durable medium, with clear, full and accurate information on the obligations and responsibilities of the investment firm with respect to the use of those financial instruments, including the terms for their restitution, and on the risks involved.

Information to clients on costs and charges (BA, Comms Team, Sales and Marketing)

UCTS / PRIIPS related costs and charges

Delegated Act: Article 50

1. For the purposes of providing information to clients on all costs and charges pursuant to Article 24(4) of Directive 2014/65/EU, investment firms shall comply with the detailed requirements in paragraphs 2 to 10.

Without prejudice to the obligations set out in Article 24(4) of Directive 2014/65/EU, investment firms providing investment services to professional clients shall have the right to agree to a limited application of the detailed requirements set out in this Article with these clients. Investment firms shall not be allowed to agree such limitations when the services of investment advice or portfolio management are provided or when, irrespective of the investment service provided, the financial instruments concerned embed a derivative.

Without prejudice to the obligations set out in Article 24(4) of Directive 2014/65/EU, investment firms providing investment services to eligible counterparties shall have the right to agree to a limited application of the detailed requirements set out in this Article, except when, irrespective of the investment service provided, the financial instruments concerned embed a derivative and the eligible counterparty intends to offer them to its clients.

2. For ex-ante and ex-post disclosure of information on costs and charges to clients, investment firms shall aggregate the following:

(a) all costs and associated charges charged by the investment firm or other parties where the client has been directed to such other parties, for the investment services(s) and/or ancillary services provided to the client; and

(b) all costs and associated charges associated with the manufacturing and managing of the financial instruments.

Costs referred to in points (a) and (b) are listed in Annex II to this Regulation. For the purposes of point (a), third party payments received by investment firms in connection with the investment service provided to a client shall be itemised separately and the aggregated costs and charges shall be totalled and expressed both as a cash amount and as a percentage.

3. Where any part of the total costs and charges is to be paid in or represents an amount of foreign currency, investment firms shall provide an indication of the currency involved and the applicable currency conversion rates and costs. Investments firms shall also inform about the arrangements for payment or other performance.
4. In relation to the disclosure of product costs and charges that are not included in the UCITS KIID, the investment firms shall calculate and disclose these costs, for example, by liaising with UCITS management companies to obtain the relevant information.
5. The obligation to provide in good time a full ex-ante disclosure of information about the aggregated costs and charges related to the financial instrument and to the investment or ancillary service provided shall apply to investment firms in the following situations:

(a) where the investment firm recommends or markets financial instruments to clients; or

(b) where the investment firm providing any investment services is required to provide clients with a UCITS KIID or PRIIPs KID in relation to the relevant financial instruments, in accordance with relevant Union legislation.

6. Investment firms that do not recommend or market a financial instrument to the client or are not obliged to provide the client with a KID/KIID in accordance with relevant Union legislation shall inform their clients about all costs and charges relating to the investment and/or ancillary service provided.

7. Where more than one investment firm provides investment or ancillary services to the client, each investment firm shall provide information about the costs of the investment or ancillary services it provides. An investment firm that recommends or markets to its clients the services provided by another firm, shall aggregate the cost and charges of its services together with the cost and charges of the services provided by the other firm. An investment firm shall take into account the costs and charges associated to the provision of other investment or ancillary services by other firms where it has directed the client to these other firms.

8. Where calculating costs and charges on an ex-ante basis, investment firms shall use actually incurred costs as a proxy for the expected costs and charges. Where actual costs are not available, the investment firm shall make reasonable estimations of these costs. Investment firms shall review ex-ante assumptions based on the ex-post experience and shall make adjustment to these assumptions, where necessary.

9. Investment firms shall provide annual ex-post information about all costs and charges related to both the financial instrument(s) and investment and ancillary service(s) where they have recommended or marketed the financial instrument(s) or where they have provided the client with the KID/KIID in relation to the financial instrument(s) and they have or have had an ongoing relationship with the client during the year. Such information shall be based on costs incurred and shall be provided on a personalised basis.

Investment firms may choose to provide such aggregated information on costs and charges of the investment services and the financial instruments together with any existing periodic reporting to clients.

10. Investment firms shall provide their clients with an illustration showing the cumulative effect of costs on return when providing investment services. Such an illustration shall be provided both on an ex-ante and ex-post basis. Investment firms shall ensure that the illustration meets the following requirements:

(a) the illustration shows the effect of the overall costs and charges on the return of the investment;

(b) the illustration shows any anticipated spikes or fluctuations in the costs; and

Output: Review of all products and the costs and charges relating to them (include CCP charges, etc), unbundling of research, breakdown of all costs including the investment service & the financial instrument

Information provided in accordance with Directive 2009/65/EC and Regulation (EU) No 1286/2014 (BA, Comms Team, Sales and Marketing)

Delegated Act: Article 51

Investment firms distributing units in collective investment undertakings or PRIIPs shall additionally inform their clients about any other costs and associated charges related to the product which may have not been included in the UCITS KID or PRIIPs KID and about the costs and charges relating to their provision of investment services in relation to that financial instrument.

Information to clients about investment advice (BA, Comms Team, Sales and Marketing)

Is the investment advice independent or not?

Delegated Act: Article 52

1. Investment firms shall explain in a clear and concise way whether and why investment advice qualifies as independent or non-independent and the type and nature of the restrictions that apply, including, when providing investment advice on an independent basis, the prohibition to receive and retain inducements.

Where advice is offered or provided to the same client on both an independent and non-independent basis, investment firms shall explain the scope of both services to allow investors to understand the differences between them and not present itself f as an independent investment adviser for the overall activity. Firms shall not give undue prominence to their independent investment advice services over non-independent investment services in their communications with clients.

2. Investment firms providing investment advice, on an independent or non- independent basis, shall explain to the client the range of financial instruments that may be recommended, including its relationship with the issuers or providers of the instruments.

3. Investment firms shall provide a description of the types of financial instruments considered, the range of financial instruments and providers analysed per each type of instrument according to the scope of the service, and, when providing independent advice, how the service provided satisfies the conditions for the provision of investment advice on an independent basis and the factors taken into consideration in the selection process used by the investment firm to recommend financial instruments, such as risks, costs and complexity of the financial instruments.
4. When the range of financial instruments assessed by the investment firm providing investment advice on an independent basis includes the investment firm’s own financial instruments or those issued or provided by entities having close links or any other close legal or economic relationship with the investment firm as well as other issuers or providers which are not linked or related, the investment firm shall distinguish, for each type of financial instrument, the range of the financial instruments issued or provided by entities not having any links with the investment firm.
5. Investments firms providing a periodic assessment of the suitability of the recommendations provided pursuant to Article 54(12) shall disclose all of the following:

(a) the frequency and extent of the periodic suitability assessment and where relevant, the conditions that trigger that assessment;

(b) the extent to which the information previously collected will be subject to reassessment; and

Ensuring that advise provided is in line with the requirements and target audience

Delegated Act: Article 53

1. Investment firms providing investment advice on an independent basis shall define and implement a selection process to assess and compare a sufficient range of financial instruments available on the market in accordance with Article 24(7)(a) of Directive 2014/65/EU. The selection process shall include the following elements:

(a) the number and variety of financial instruments considered is proportionate to the scope of investment advice services offered by the independent investment adviser;

(b) the number and variety of financial instruments considered is adequately representative of financial instruments available on the market;

(c) the quantity of financial instruments issued by the investment firm itself or by entities closely linked to the investment firm itself is proportionate to the total amount of financial instruments considered; and

(d) the criteria for selecting the various financial instruments shall include all relevant aspects such as risks, costs and complexity as well as the characteristics of the investment firm’s clients, and shall ensure that the selection of the instruments that may be recommended is not biased.

Where such a comparison is not possible due to the business model or the specific scope of the service provided, the investment firm providing investment advice shall not present itself as independent.

2. An investment firm that provides investment advice on an independent basis and that focuses on certain categories or a specified range of financial instruments shall comply with the following requirements:

(a) the firm shall market itself in a way that is intended only to attract clients with a preference for those categories or range of financial instruments;

(b) the firm shall require clients to indicate that they are only interested in investing in the specified category or range of financial instruments; and

(c) prior to the provision of the service, the firm shall ensure that its service is appropriate for each new client on the basis that its business model matches the client’s needs and objectives, and the range of financial instruments that are suitable for the client. Where this is not the case the firm shall not provide such a service to the client.

3. An investment firm offering investment advice on both an independent basis and on a non-independent basis shall comply with the following obligations:

(a) in good time before the provision of its services, the investment firm has informed its clients, in a durable medium, whether the advice will be independent or non-independent in accordance with Article 24(4)(a) of Directive 2014/65/EU and the relevant implementing measures;

(b) the investment firm has presented itself as independent for its business as a whole but has only done so with respect to the services for which it provides investment advice on an independent basis; and

(c) the investment firms has adequate organisational requirements and controls in place to ensure that both types of advice services and advisers are clearly separated from each other and that clients are not likely to be confused about the type of advice that they are receiving and are given the type of advice that is appropriate for them. The investment firm shall not allow a natural person to provide both independent and non-independent advice.

Output: Reviewed sales material, website, contract to ensure it displays that investment advice is independent.

4. Product Development

Product governance obligations for investment firms manufacturing financial instruments

Product governance obligations for distributors

5. Client Services, Onboarding and Authorisation

6. Sales

7. Trading Venues, Systematic Internalisers and Regulated Markets

8. Trading

9. Credit Risk Management

Risk Management (BA, Credit Risk Management Team)

Review of Policy to handle Trading Venues and Mandatory Clearing

Operational Policies and Procedures of Risk Management
Delegated Act: Article 22 (see above)

Output: Completed Policies and Procedures for Risk Management.

Credit Line Definition (BA, Credit Risk Management Team)

Define Credit lines to Counterparties based on new exposures (eg No strict credit exposure in OTC Clearing - volume lines?)

Clearing obligation for derivatives traded on regulated markets and timing of acceptance of clearing

MiFID II / MiFIR: Article 29

All derivatives transacted on an RM to be cleared at a CCP.
Automated systems for CCPs and Clearing Members for submission and clearing ASATP. RTS for systems and timeframes

Output: Completed Review of the Risk Policy to take into consideration any changes from MIFID II, but in particular the effect of Mandatory clearing and the introduction of central clearing.

Collateral Solution (BA, Credit Risk Management Team)

Redefinition of Collateral interaction with credit Risk due to Central Clearing and Title Transfer Rule changes
MiFID II / MiFIR: Article 29 (see above)
Delegated Act: Article 63

1. Investment firms that hold client financial instruments or client funds shall send at least on a quarterly basis, to each client for whom they hold financial instruments or funds, a statement in a durable medium of those financial instruments or funds unless such a statement has been provided in any other periodic statement. Upon client request, firms shall provide such statement more frequently at a commercial cost.

The first subparagraph shall not apply to a credit institution authorised under Directive 2000/12/EC in respect of deposits within the meaning of that Directive held by that institution.

2. The statement of client assets referred to in paragraph 1 shall include the following information:

(a) details of all the financial instruments or funds held by the investment firm for the client at the end of the period covered by the statement;

(b) the extent to which any client financial instruments or client funds have been the subject of securities financing transactions;

(c) the extent of any benefit that has accrued to the client by virtue of participation in any securities financing transactions, and the basis on which that benefit has accrued;

(d) a clear indication of the assets or funds which are subject to the rules of Directive 2014/65/EU and its implementing measures and those that are not, such as those that are subject to Title Transfer Collateral Agreement;

(e) a clear indication of which assets are affected by some peculiarities in their ownership status, for instance due to a security interest;

(f) the market or estimated value, when the market value is not available, of the financial instruments included in the statement with a clear indication of the fact that the absence of a market price is likely to be indicative of a lack of liquidity. The evaluation of the estimated value shall be performed by the firm on a best effort basis.

In cases where the portfolio of a client includes the proceeds of one or more unsettled transactions, the information referred to in point (a) may be based either on the trade date or the settlement date, provided that the same basis is applied consistently to all such information in the statement.

The periodic statement of client assets referred to in paragraph 1 shall not be provided where the investment firm provides its clients with access to an online system, which qualifies as a durable medium, where up-to-date statements of client’s financial instruments or funds can be easily accessed by the client and the firm has evidence that the client has accessed this statement at least once during the relevant quarter.

3. Investment firms which hold financial instruments or funds and which carry out the service of portfolio management for a client may include the statement of client assets referred to in paragraph 1 in the periodic statement it provides to that client pursuant to Article 60(1).

Output: Redefinition of collateral interaction with credit Risk due to Central Clearing and Title Transfer Rule changes

10. Market Risk Management

Risk Management (BA, Market Risk Management Team)

Review of Data Sourcing for Risk Management

Operational Policies and Procedures of Risk Management
Delegated Act: Article 22 (see above)

Output: Completed Policies and Procedures for Risk Management.

Data Sourcing (BA, Market Risk Management Team)

Sourcing of Data from APA's or CTP providers for Market Risk Calculations

This is covered in RTS 4 (Project 4.1)

Output: Completed documentation with APA's and CTP's so that the market risk team can source this information if required

11. Middle Office

Tradeflow Analysis (BA, The Middle Office)

Review of Pricing Sources given Mandatory Clearing

Analysis of middle office's role in each tradeflow with respect to central clearing
MiFID II / MiFIR: Article 29 (see above)

Output: Analysis of middle office's role in each tradeflow with respect to central clearing

Access to Benchmarks (BA, The Middle Office)

Non-discriminatory access to and obligation to licence benchmarks
This is covered in RTS 16 (Project 16.1)
MiFID II / MiFIR: Article 37

Where the value of any financial instrument is calculated by reference to a benchmark, a person with proprietary rights to the benchmark shall ensure that CCPs and trading venues are permitted, for the purposes of trading and clearing non-discriminatory access to:

A) Relevant price and data feeds on the composition, methodology and pricing of that benchmark.

B) Licenses.

12. Product Control

Tradeflow Analysis (BA, The Product Control Team)

Analysis of Product Control's role in each tradeflow

Output: Completed tradeflows/Reconciliation flows for each product taking CCP credit exposure into consideration

13. Finance

Inappropriate use of title transfer collateral arrangements (BA, The Accounting and Finance Team)

Full Impact analysis on Finance by MiFID II

Inappropriate use of title transfer collateral arrangements

Output: Completed Signed off Plan of any changes to Finance as a result of MiFID II

14. Confirmations, Agreements and Reporting

Tradeflow Analysis

Analysis of Confirmations Role in each tradeflow
Output: Documented tradeflows including the confirmation workflow for each product

Confirmation Solution

Selection and Integration of Confirmation Solution (markitwire for Central Clearing)
MiFID II / MiFIR: Article 29 (see above)

Output: Project Plan for the Implementation of a Confirmation Matching Solution across all products

CCP Agreements

Completion of CCP Clearing Agreements
MiFID II / MiFIR: Article 29 (see above)

Output: Completed and approved list of CCP Agreements

Trading Venue Agreements

Completion of Trading Venue Agreements

Obligation to Trade on Regulated Markets; MTF and OTF

MiFID II / MiFIR: Article 28

Financial Counterparties (FCs) and qualifying Non-financial counterparties (NFCs) must trade all derivatives (subject to trading obligation) on RM MTF, OTF or authorised 3rd country venues

Output: Completed and approved list of Trading Venue Agreements

Client Agreement

Client Agreements (Professional / Retail)

Output: Completed list of Clients and Client Documentation taking into consideration

Storage Solution

Confirmations / Agreements / Reports

Output: Storage solution for all confirmations of all trades as part of an overall client documentation Solution

Reporting

Reporting To Clients (40 - 43 of MIFID directive)
New Reporting Requirements (NEEDS VERIFICATION & CHECKING)

Output: Completed review of all reporting to ensure it is in line with MIFID II

Client Reporting Policy

Client Reporting to match the complexity of the client and the client relationship

Output: Ensuring there is a reporting structure in place to match the client relationship to ensure that the client has the information that he requires

Client Statements

Analysis of client statements

Reporting obligations in respect of eligible counterparties

Additional reporting obligations for portfolio management or contingent liability transactions

15. Operations

Tradeflow Analysis

Analysis of Settlements in each tradeflow

Clearing obligation for derivatives traded on regulated markets and timing of acceptance of clearing

Indirect Clearing Arrangements

Trading Obligation Procedure

Mechanism to avoid duplicate or conflicting rules

Register of Derivatives Subject to the trading Obligation

Access to CCP's

Non-discriminatory access to a CCP

Safe-Guarding of Client Assets

Safe-Guarding of Client Assets - Implementation Solution

Mandatory Clearing

Ensure Mandatory Clearing is live for all Products

16. Trade Event Management

Cash Management (BA, The Operations/Collateral Team)

Review of Impact of Mandatory Clearing on Cash Management and Collateral Management

Ensure Cash Management Procedures incorporate new CCP Accounts

Output: Completed Project Plan to incorporate the changes the Central Clearing into the Daily Cash Management Function

Safe-Guarding of Client Assets (Collateral Mgt) (BA, The Operations/Collateral Team)

Safe-Guarding of Client Assets - Implementation Solution

Output: Completed Project Plan of how to implement a procedure or a piece of technology to ensure that client assets are being safe-guarded

17. Reconciliations

Reconciliation

Review of Reconciliation Architecture to take in Mandatory Clearing

Design Reconciliation Architecture for all Front to Back Office Tradeflows (Include Trading Venues, CCP's)

Output: Completed Project Plan to incorporate the OTF/MTF and CCP Architectures into the overall reconciliation Architecture of the Organisation

18. Regulatory Reporting

See Technology Section

Trade Reporting, MIFIR Reporting, Impact Analysis on Reg Reporting

19. Technology

RTS 1

Project 1.1 - Pre -trade reporting requirements for equities (Trading Venues)

Trading venue shall make public the range of bid and offer prices (also apply to any 'actionable indication of interest') and the depth of trading interest at those prices in accordance with the type of trading system they operate and the information requirements set out in Table 1 of Annex I.

Table 1 of Annex I

Project 1.2 - Post-trade reporting requirements for equities (Investment Firms)

All Investment firms (market makers + those operating a trading venue + those trading outside the rules of a trading venue) shall :

1. Make public each transaction through an APA (within 1 min of transaction for those traded during daily trading hours and before stat of next trading day for those trading outside of trading hours) and

2. Make public a new trade report of cancelled trades along with the details of original trades and the cancellation flag

3. Make public a new trade report that contains all the details of the original trade report with all necessary details corrected and the amendment flag

Pre-trade Transparency (shares, depository receipts, exchange-traded funds, certificates and other similar financial instruments)

RTS 2: Pre-trade transparency (bonds, structured finance products, emission allowances and derivatives)

RTS 3: Volume cap mechanism

RTS 4: Derivative trading obligation

RTS 5: Derivatives have a direct, substantial and foreseeable effect within the EU

RTS 6: Algorithmic trading (DEA and general clearing)

RTS 7: Algorithmic trading via MTF / OTF

RTS 8: Market making agreements / schemes

RTS 9: Ratio of unexpected orders to transactions

RTS 10: Co-location and fee structures are fair and non-discriminatory

RTS 11: Tick-size regimes for shares, depository receipts and exchange-traded funds

RTS 12: Trading halt notifications

RTS 13: Publication of data reporting services providers - authorisation, organisational requirements

RTS 14: Data disaggregation

RTS 15: Central Counterparties and trading venues

RTS 16: Access to benchmarks

RTS 17: Admission of financial instruments to trading on regulated markets

RTS 18: Suspension and removal of financial instruments from trading

ITS 19: Functioning of MTF / OTFs

RTS 20: Ancillary to main business criteria

RTS 21: Position limits for commodity derivatives traded on trading venues and economically equivalent OTC contracts

RTS 22: MIFiR Reporting

Project 2.2 - Data standards and formats for transaction reporting (Banks / Investment Firms)

1. A transaction report shall be processed using all details specified in Table 2 of the Annex that pertain to the transaction concerned, and The information shall be processed using the data standards and formats specified in Table 2 Annex I.

2. Transaction reports shall be processed in an electronic and machine-readable form and common XML template in accordance with the ISO 20022 methodology.

3. Competent authorities shall use secure electronic communication channels when exchanging transaction reports with each other.

4. Member States shall ensure that legal entity identifiers are developed, attributed and maintained in accordance with the governance framework of the Legal Entity Identifier Regulatory Oversight Committee.

Table 1 of Annex I

Table 2 of Annex I

Table 1 of Annex II

RTS 23: Reference data reporting

RTS 24:

Reporting and Record Keeping System

Create a comprehensive Record Keeping Solution

Delegated Act: Annex I

Recording of Phone Conversations and Electronic Conversations

Create a Comprehensive Phone Ordering, Electronic Ordering and Sales System which links to the trades involved
Delegated Act: Article 76

1. Investment firms shall establish, implement and maintain an effective recording of telephone conversations and electronic communications policy, set out in writing, and appropriate to the size and organisation of the firm, and the nature, scale and complexity of its business. The policy shall include the following content:

(a) the identification of the telephone conversations and electronic communications, including relevant internal telephone conversations and electronic communications, that are subject to the recording requirements in accordance with Article 16(7) of Directive 2014/65/EU; and

(b) the specification of the procedures to be followed and measures to be adopted to ensure the firm’s compliance with the third and eighth subparagraphs of Article 16(7) of Directive 2014/65/EU where exceptional circumstances arise and the firm is unable to record the conversation/communication on devices issued, accepted or permitted by the firm. Evidence of such circumstances shall be retained and shall be accessible to competent authorities.

2. Investment firms shall ensure that the management body has effective oversight and control over the policies and procedures relating to the firm’s recording of telephone conversations and electronic communications.

3. Investment firms shall ensure that the arrangements to comply with recording requirements are technology-neutral. Firms shall periodically evaluate the effectiveness of the firm’s policies and procedures and adopt any such alternative or additional measures and procedures as are necessary and appropriate. At a minimum, such adoption of alternative or additional measures shall occur when a new medium of communication is accepted or permitted for use by the firm.

4. Investment firms shall keep and regularly update a record of those individuals who have firm devices or privately owned devices that have been approved for use by the firm.

5. Investment firms shall educate and train employees in procedures governing the requirements in Article 16(7) of Directive 2014/65/EU.

6. To monitor compliance with the recording and record-keeping requirements in accordance with Article 16(7) of Directive 2014/65/EU, investment firms shall periodically monitor the records of transactions and orders subject to these requirements, including relevant conversations. Such monitoring shall be risk based and proportionate.

7. Investment firms shall demonstrate the policies, procedures and management oversight of the recording rules to the relevant competent authorities upon request.

8. Before investment firms provide investment services and activities relating to the reception, transmission and execution of orders to new and existing clients, firms shall inform the client of the following:

(a) that the conversations and communications are being recorded; and

(b) that a copy of the recording of such conversations with the client and communications with the client will be available on request for a period of five years and, where requested by the competent authority, for a period of up to seven years.

The information referred to in the first sub-paragraph shall be presented in the same language(s) as that used to provide investment services to clients.

9. Investment firms shall record in a durable medium all relevant information related to relevant face-to-face conversations with clients. The information recorded shall include at least the following:

(a) date and time of meetings;

(b) location of meetings;

(d) initiator of the meetings; and

(e) relevant information about the client order including the price, volume, type of order and when it shall be transmitted or executed.

10. Records shall be stored in a durable medium, which allows them to be replayed or copied and must be retained in a format that does not allow the original record to be altered or deleted.

Records shall be stored in a medium so that they are readily accessible and available to clients on request.

Firms shall ensure the quality, accuracy and completeness of the records of all telephone recordings and electronic communications.

11. The period of time for the retention of a record shall begin on the date when the record is created.

Record keeping of transactions and order processing

Delegated Act: Article 75

Investment firms shall, immediately after receiving a client order or making a decision to deal to the extent they are applicable to the order or decision to deal in question, record and keep at the disposal of the competent authority at least the details set out in Section 2 of Annex IV. Where the details set out in Section 2 of Annex IV are also prescribed under Articles 25 and 26 of Regulation No (EU) 600/2014, they shall be maintained in a consistent way and according to the same standards prescribed under Articles 25 and 26 of Regulation (EU) No 600/2014.

Record keeping of client orders and decision to deal

Delegated Act: Article 74

An investment firm shall, in relation to every initial order received from a client and in relation to every initial decision to deal taken, immediately record and keep at the disposal of the competent authority at least the details set out in Section 1 of Annex IV to this Regulation to the extent they are applicable to the order or decision to deal in question.

Where the details set out in Section 1 of Annex IV to this Regulation are also prescribed under Articles 25 and 26 of Regulation No (EU) 600/2014, these details should be maintained in a consistent way and according to the same standards prescribed under Articles 25 and 26 of Regulation No (EU) 600/2014.

Record keeping of rights and obligations of the investment firm and the client

Delegated Act: Article 73

Records which set out the respective rights and obligations of the investment firm and the client under an agreement to provide services, or the terms on which the firm provides services to the client, shall be retained for at least the duration of the relationship with the client.

Retention Of Records

Delegated Act: Article 72

1. The records shall be retained in a medium that allows the storage of information in a way accessible for future reference by the competent authority, and in such a form and manner that the following conditions are met:

(a) the competent authority is able to access them readily and to reconstitute each key stage of the processing of each transaction;

(b) it is possible for any corrections or other amendments, and the contents of the records prior to such corrections or amendments, to be easily ascertained;

(d) it allows IT or any other efficient exploitation when the analysis of the data cannot be easily carried out due to the volume and the nature of the data; and

(e) the firm’s arrangements comply with the record keeping requirements irrespective of the technology used.

2. Investment firms shall keep at least the records identified in Annex I to this Regulation depending upon the nature of their activities.

The list of records identified in Annex I to this Regulation is without prejudice to any other record-keeping obligations arising from other legislation.

3. Investment firms shall also keep records of any policies and procedures they are required to maintain pursuant to Directive 2014/65/EU, Regulation (EU) No 600/2014, Directive 2014/57/EU and Regulation (EU) No 596/2014 and their respective implementing measures in writing.

Competent authorities may require investment firms to keep additional records to the list identified in Annex I to this Regulation.

Reporting obligations in respect of execution of orders other than for portfolio management

Delegated Act: Article 59

1. Investment firms having carried out an order on behalf of a client, other than for portfolio management, shall, in respect of that order:

(a) promptly provide the client, in a durable medium, with the essential information concerning the execution of that order;

(b) send a notice to the client in a durable medium confirming execution of the order as soon as possible and no later than the first business day following execution or, where the confirmation is received by the investment firm from a third party, no later than the first business day following receipt of the confirmation from the third party.

Point (b) shall not apply where the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the client by another person.

Points (a) and (b) shall not apply where orders executed on behalf of clients relate to bonds funding mortgage loan agreements with the said clients, in which case the report on the transaction shall be made at the same time as the terms of the mortgage loan are communicated, but no later than one month after the execution of the order.

2. In addition to the requirements under paragraph 1, investment firms shall supply the client, on request, with information about the status of his order.

3. In the case of client orders relating to units or shares in a collective investment undertaking which are executed periodically, investment firms shall either take the action specified in point (b) of paragraph 1 or provide the client, at least once every six months, with the information listed in paragraph 4 in respect of those transactions.

4. The notice referred to in point (b) of paragraph 1 shall include such of the following information as is applicable and, where relevant, in accordance with the regulatory technical standards on reporting obligations adopted in accordance with Article 26 of Regulation (EU) No 600/2014:

(a) the reporting firm identification; EN76 EN

(b) the name or other designation of the client;

(d) the trading time;

(e) the type of the order;

(f) the venue identification;

(g) the instrument identification;

(h) the buy/sell indicator;

(i) the nature of the order if other than buy/sell;

(j) the quantity;

(k) the unit price;

(l) the total consideration;

(m) a total sum of the commissions and expenses charged and, where the client so requests, an itemised breakdown including, where relevant, the amount of any mark-up or mark-down imposed where the transaction was executed by an investment firm when dealing on own account, and the investment firm owes a duty of best execution to the client;

(n) the rate of exchange obtained where the transaction involves a conversion of currency;

(o) the client's responsibilities in relation to the settlement of the transaction, including the time limit for payment or delivery as well as the appropriate account details where these details and responsibilities have not previously been notified to the client;

(p) where the client's counterparty was the investment firm itself or any person in the investment firm's group or another client of the investment firm, the fact that this was the case unless the order was executed through a trading system that facilitates anonymous trading.

For the purposes of point (k), where the order is executed in tranches, the investment firm may supply the client with information about the price of each tranche or the average price. Where the average price is provided, the investment firm shall supply the client with information about the price of each tranche upon request.

5. The investment firm may provide the client with the information referred to in paragraph 4 using standard codes if it also provides an explanation of the codes used.

Reporting obligations in respect of portfolio management
Delegated Act: Article 60

1. Investments firms which provide the service of portfolio management to clients shall provide each such client with a periodic statement in a durable medium of the portfolio management activities carried out on behalf of that client unless such a statement is provided by another person.

2. The periodic statement required under paragraph 1 shall provide a fair and balanced review of the activities undertaken and of the performance of the portfolio during the reporting period and shall include, where relevant, the following information:

(a) the name of the investment firm;

(b) the name or other designation of the client's account;

(c) a statement of the contents and the valuation of the portfolio, including details of each financial instrument held, its market value, or fair value if market value is unavailable and the cash balance at the beginning and at the end of the reporting period, and the performance of the portfolio during the reporting period;

(d) the total amount of fees and charges incurred during the reporting period, itemising at least total management fees and total costs associated with execution, and including, where relevant, a statement that a more detailed breakdown will be provided on request;

(e) a comparison of performance during the period covered by the statement with the investment performance benchmark (if any) agreed between the investment firm and the client;

(f) the total amount of dividends, interest and other payments received during the reporting period in relation to the client's portfolio;

(g) information about other corporate actions giving rights in relation to financial instruments held in the portfolio;

(h) for each transaction executed during the period, the information referred to in Article 59(4)(c) to (l) where relevant, unless the client elects to receive information about executed transactions on a transaction-by-transaction basis, in which case paragraph 4 of this Article shall apply.

3. The periodic statement referred to in paragraph 1 shall be provided once every three months, except in the following cases:

(a) where the investment firm provides its clients with access to an online system, which qualifies as a durable medium, where up-to-date valuations of the client’s portfolio can be accessed and where the client can easily access the information required by Article 63(2) and the firm has evidence that the client has accessed a valuation of their portfolio at least once during the relevant quarter;

(b) in cases where paragraph 4 applies, the periodic statement must be provided at least once every 12 months;

(c) where the agreement between an investment firm and a client for a portfolio management service authorises a leveraged portfolio, the periodic statement must be provided at least once a month.

The exception provided for in point (b) shall not apply in the case of transactions in financial instruments covered by Article 4(1)(44)(c) of, or any of points 4 to 11 of Section C in Annex I to Directive 2014/65/EU.

4. Investment firms, in cases where the client elects to receive information about executed transactions on a transaction-by-transaction basis, shall provide promptly to the client, on the execution of a transaction by the portfolio manager, the essential information concerning that transaction in a durable medium.

The investment firm shall send the client a notice confirming the transaction and containing the information referred to in Article 59(4) no later than the first business day following that execution or, where the confirmation is received by the investment firm from a third party, no later than the first business day following receipt of the confirmation from the third party.

The second subparagraph shall not apply where the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the client by another person.

Best Execution Reporting - Trading Venue Reports (RTS 27)

Need to Receive the Report Created by the Trade Repository

Best Execution Reporting - End of Year Volumes (RTS 28)

Need to Report all trades Executed with client and their 5 comparable sources - Volumes

1. Investment firms shall publish for each class(in terms of liquidity - Annex I) of financial instruments, the top five execution venues in terms of trading volumes for all executed client orders for retail clients, professional clients and for orders in Securities Financing Transactions.

2. An investment firm shall publish for each class of financial instruments, a summary of the analysis and conclusions it draws from its detailed monitoring of the quality of execution obtained on the execution venues where it executed all client orders in the previous year.

3. Investment firms shall publish the information required on their websites, by filling in the templates set out in Annex II, in a machine-readable electronic format, available for downloading by the public.

Delegated Act: Article 64

1. When executing client orders, investment firms shall take into account the following criteria for determining the relative importance of the factors referred to in Article 27(1) of Directive 2014/65/EU:

(a) the characteristics of the client including the categorisation of the client as retail or professional;

(b) the characteristics of the client order, including where the order involves a securities financing transaction (SFT);

(d) the characteristics of the execution venues to which that order can be directed.

For the purposes of this Article and Articles 65 and 66, ‘execution venue’ includes a regulated market, an MTF, an OTF, a systematic internaliser, or a market maker or other liquidity provider or an entity that performs a similar function in a third country to the functions performed by any of the foregoing.

2. An investment firm satisfies its obligation under Article 27(1) of Directive 2014/65/EU to take all sufficient steps to obtain the best possible result for a client to the extent that it executes an order or a specific aspect of an order following specific instructions from the client relating to the order or the specific aspect of the order.

3. Investment firms shall not structure or charge their commissions in such a way as to discriminate unfairly between execution venues.

4. When executing orders or taking decision to deal in OTC products including bespoke products, the investment firm shall check the fairness of the price proposed to the client, by gathering market data used in the estimation of the price of such product and, where possible, by comparing with similar or comparable products.

Delegated Act: Article 66

1. Investment firms shall review, at least on an annual basis execution policy established pursuant to Article 27(4) of Directive 2014/65/EU, as well as their order execution arrangements.

Such a review shall also be carried out whenever a material change as defined in Article 65(7) occurs that affects the firm's ability to continue to obtain the best possible result for the execution of its client orders on a consistent basis using the venues included in its execution policy. An investment firm shall assess whether a material change has occurred and shall consider making changes to the relative importance of the best execution factors in meeting the overarching best execution requirement.

2. The information on the execution policy shall be customised depending on the class of financial instrument and type of the service provided and shall include information set out in paragraphs 3 to 9.

3. Investment firms shall provide clients with the following details on their execution policy in good time prior to the provision of the service:

(a) an account of the relative importance the investment firm assigns, in accordance with the criteria specified in Article 59(1), to the factors referred to in Article 27(1) of Directive 2014/65/EU, or the process by which the firm determines the relative importance of those factors.

(b) a list of the execution venues on which the firm places significant reliance in meeting its obligation to take all reasonable steps to obtain on a consistent basis the best possible result for the execution of client orders and specifying which execution venues are used for each class of financial instruments, for retail client orders, professional client orders and SFTs;

(c) a list of factors used to select an execution venue, including qualitative factors such as clearing schemes, circuit breakers, scheduled actions, or any other relevant consideration, and the relative importance of each factor; The information about the factors used to select an execution venue for execution shall be consistent with the controls used by the firm to demonstrate to clients that best execution has been achieved in a consistent basis when reviewing the adequacy of its policy and arrangements;

(d) how the execution factors of price costs, speed, likelihood of execution and any other relevant factors are considered as part of all sufficient steps to obtain the best possible result for the client;

(e) where applicable, information that the firm executes orders outside a trading venue, the consequences, for example counterparty risk arising from execution outside a trading venue, and upon client request, additional information about the consequences of this means of execution;

(f) a clear and prominent warning that any specific instructions from a client may prevent the firm from taking the steps that it has designed and implemented in its execution policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions;

(g) a summary of the selection process for execution venues, execution strategies employed, the procedures and process used to analyse the quality of execution obtained and how the firms monitor and verify that the best possible results were obtained for clients.

That information shall be provided in a durable medium, or by means of a website (where that does not constitute a durable medium) provided that the conditions specified in Article 3(2) are satisfied.

4. Where investment firms apply different fees depending on the execution venue, the firm shall explain these differences in sufficient detail in order to allow the client to understand the advantages and the disadvantages of the choice of a single execution venue.

5. Where investment firms invite clients to choose an execution venue, fair, clear and not misleading information shall be provided to prevent the client from choosing one execution venue rather than another on the sole basis of the price policy applied by the firm.

6. Investment firms shall only receive third-party payments that comply with Article 24(9) of Directive 2014/65/EU and shall inform clients about the inducements that the firm may receive from the execution venues. The information shall specify the fees charged by the investment firm to all counterparties involved in the transaction, and where the fees vary depending on the client, the information shall indicate the maximum fees or range of the fees that may be payable.

7. Where an investment firm charges more than one participant in a transaction, in compliance with Article 24(9) of Directive 2014/65/EC and its implementing measures, the firm shall inform its clients of the value of any monetary or non- monetary benefits received by the firm.

8. Where a client makes reasonable and proportionate requests for information about its policies or arrangements and how they are reviewed to an investment firm, that investment firm shall answer clearly and within a reasonable time.

9. Where an investment firm executes orders for retail clients, it shall provide those clients with a summary of the relevant policy, focused on the total costs they incur. The summary shall also provide a link to the most recent execution quality data published in accordance with Article 27(3) of Directive 2014/65/EC for each execution venue listed by the investment firm in its execution policy.

RTS 28 Annex Information

(1) It is essential to enable the public and investors to evaluate the quality of an investment firm’s execution practices and the identity of the top five execution venues in terms of trading volumes where those investment firms executed client orders in the preceding year. In order to make meaningful comparisons and analyse the choice of top five execution venues it is necessary that information be published by investment firms specifically in respect of each class of financial instruments. In order to be able to fully evaluate the order flow of client orders to execution venues, investors and the public should be able to clearly identify where the investment firm itself was one of the top five execution venues for each class of financial instrument.

(2) In order to fully assess the extent of the quality of execution being obtained on execution venues used by investment firms to execute client orders, including execution venues in third countries, it is appropriate to require investment firms to publish information required under this Regulation in relation to trading venues, market makers or other liquidity providers or any entity that performs a similar function in a third country to the functions performed by any of the foregoing.

(3) In order to provide very precise and comparable information, it is necessary to set out classes of financial instruments based on their characteristics relevant for publication purposes. A class of financial instruments should be narrow enough to reveal differences in order execution behaviour between classes but at the same time broad enough to ensure that the reporting obligation on investment firms is proportionate. Given the breadth of the equity class of financial instruments, it is appropriate to divide this class into subclasses based on liquidity. As liquidity is an essential factor governing execution behaviours and as execution venues are often competing to attract flows of the most frequently traded stocks, it is appropriate that equity instruments are classified according to their liquidity as determined under the tick size regime as set out under Regulation (EU) No 600/2014.

(4) When publishing the identity of the top five execution venues on which they execute client orders it is appropriate for investment firms to publish information about the volume and number of orders executed on each execution venue, so that investors may be able to form an opinion as to the flow of client orders from the firm to execution venue. Where, for one or several classes of financial instruments, an investment firm only executes a very small number of orders, information on the top five execution venues would not be very meaningful nor representative of order execution arrangements. It is therefore appropriate to require investment firms to clearly indicate the classes of financial instruments for which they execute a very small number of orders.

(5) To prevent potentially market sensitive disclosures on the volume of business being conducted by the investment firm, the volume of execution and the number of executed orders should be expressed as a percentage of the investment firm’s total execution volumes and number of executed orders in that class of financial instrument, respectively, rather than as absolute values.

(6) It is appropriate to require investment firms to publish information which is relevant to their order execution behaviour. To ensure that investment firms are not held accountable for order execution decisions for which they are not responsible, it is appropriate for them to disclose the percentage of orders executed on each of the top five execution venues where the choice of execution venue has been specified by clients.

(7) There are several factors which may potentially influence the order execution behaviour of investment firms such as close links between investment firms and execution venues. Given the potential materiality of these factors it is appropriate to require analysis of such factors in assessing the quality of execution obtained on all execution venues.

(8) The different order types can be an important factor explaining how and why investment firms are executing their orders on a given execution venue. It also may impact the way an investment firm will set its execution strategies including programming of smart order routers to meet those orders’ specific purposes. It istherefore appropriate that a distinction between those categories be clearly marked in the report.

(9) In order to properly analyse information it is important that users are in a position to differentiate between the execution venues used for professional client orders and for retail client orders, given the notable differences in how firms obtain the best possible result for retail clients as compared to professional clients, namely that investment firms must predominantly assess the factors of price and cost when executing orders from retail clients. It is therefore appropriate that information on the top five execution venues be provided distinctly for retail clients and professional clients so that that a qualitative assessment can be made of the order flow to such venues.

(10) Securities financing transactions include a variety of secured transactions such as lending or borrowing securities, repurchase or reverse repurchase transactions and buy-sell back or sell-buy back transactions. Securities lending is primarily driven by demand for specific securities and is used, for instance, in transactions where securities are used to borrow or to lend cash or settlement purposes. SFTs are therefore used as a source of funding, for liquidity, and collateral management. The rationale for those transactions is therefore specific: in such transactions, securities are not bought or sold for their expected price movements but sought after or provided as collateral, making their economic justification very different from other types of transactions. Due to the specific nature of securities financing transactions, and given that their large size would likely distort the more representative set of client transactions (i.e. those not involving securities financing transactions), it is necessary to maintain separate evidence of such executions. To this effect, investment firms executing securities financing transactions should not include them in the same table concerning the top five execution venues on which they execute other client orders. It is therefore appropriate that investment firms summarise and make public the top five execution venues in terms of trading volumes where they executed securities financing transactions in a separate report so that that a qualitative assessment can be made of the order flow to such venues.

(11) It is appropriate that investment firms should publish an assessment of quality of execution obtained on all venues used by the firm. This information will provide a clear picture of the execution strategies and tools used to assess the quality of execution obtained on those venues. This information will also allow investors to assess the effectiveness of the monitoring carried out by investment firms in relation to those execution venues.

(12) In specifically assessing the quality of execution obtained on all execution venues in relation to cost, it is appropriate that investment firms also perform an analysis of the arrangements it has with these venues in relation to payments made or received and to discounts, rebates or non-monetary benefits received. Such an assessment should also allow the public to consider how such arrangements impact the costs faced by the investor and how they comply with Article 27(2) of Directive 2004/65/EC.

(13) It is also appropriate to determine the scope of such publication and its essential features, including the use that investment firms make of the data on execution quality available from execution venues under Regulation **(RTS under 27(10)(a)).

(14) Information on identity of execution venues and on the quality of execution should be published annually and refer to order execution behaviour for each class of financial instruments in order to capture relevant changes within the preceding calendar year.

(15) Investment firms should not be prevented from adopting an additional level of reporting which is more granular, provided that in such case the additional report does not replace but complements what is required in this Regulation.

(16) The new legislation of the European Parliament and of the Council on markets in financial instruments set out in Directive 2014/65/EU and Regulation (EU) No 600/2014 applies from 3 January 2017. To ensure consistency and legal certainty, this Regulation should apply from the same date.

(17) This Regulation is based on the draft regulatory technical standards submitted by the European Securities and Markets Authority (ESMA) to the Commission.

(18) ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the opinion of the Securities and Markets Stakeholder Group established by Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council2

RTS Annex i: Article 1

Scope of the Regulation

This Regulation shall apply to investment firms in relation to client orders executed on trading venues, systematic internalisers, market makers or other liquidity providers or entities that perform a similar function to those performed by any of the foregoing in a third country.

RTS Annex i: Article 2

Information on the top five execution venues and quality of execution obtained

1. Investment firms shall publish for each class of financial instruments as referred to in Annex 1, the top five execution venues in terms of trading volumes for all executed client orders for retail clients, excluding orders in Securities Financing Transactions, as set out in Annex II (Table 1) the following information:
(a) class of financial instruments;
(b) venue name and identifier;
(c) volume of client orders executed on that execution venue expressed as a percentage of total executed volume;
(d) number of client orders executed on that execution venue expressed as a percentage of total executed orders;
(e) percentage of the executed orders referred to in point (d) that were passive and aggressive orders;
(f) percentage of orders referred to in point (d) that were directed orders;
(g) notification of whether it has executed an average of less than one trade per business day in the previous year in that class of financial instruments.

2. Investment firms shall publish for each class of financial instruments as referred to in Annex 1, the top five execution venues in terms of trading volumes for all executed client orders for professional clients, excluding orders in Securities Financing Transactions, as set out in Annex II (Table 2) the following information:
(a) class of financial instruments;
(b) venue name and identifier;
(c) volume of client orders executed on that execution venue expressed as a percentage of total executed volume;
(d) number of client orders executed on that execution venue expressed as a percentage of total executed orders;
(e) percentage of the executed orders referred to in point (d) that were passive and aggressive orders;
(f) percentage of orders referred to in point (d) that were directed orders
(g) notification of whether it has executed an average of less than one trade per business day in the previous year in that class of financial instruments

3. Investment firms shall publish for each class of financial instruments as referred to in Annex 1, the top five execution venues in terms of trading volumes for all executed client orders in Securities Financing Transactions, as set out in Annex II (Table 3) the following information:
(a) volume of client orders executed on that execution venue expressed as a percentage of total executed volume;
(b) number of client orders executed on that execution venue expressed as a percentage of total executed orders;
(c) notification where it has executed an average of less than one trade per business day in the previous year in that class of financial instruments.

4. An investment firm shall publish for each class of financial instruments, a summary of the analysis and conclusions it draws from its detailed monitoring of the quality of execution obtained on the execution venues where it executed all client orders in the previous year. This information shall include:
(a) an explanation of the relative importance the firm gave to the execution factors of price, costs, speed, likelihood of execution or any other consideration including qualitative factors when making assessments of the quality of execution;
(b) a description of any close links, conflicts of interests, and common ownerships with respect to any execution venues used to execute orders;
(c) a description of any specific arrangements with any execution venues regarding payments made or received, discounts, rebates or non-monetary benefits received;
(d) anexplanationofthefactorsthatledtoachangeinthelistofexecutionvenueslistedin the firm’s execution policy, if such a change occurred;
(e) an explanation of how order execution differs according to client categorisation, where the firm treats such category of client differently and where it may affect the order execution arrangements;
(f) an explanation of when other criteria were given precedence over immediate price and cost when executing retail client orders and how these other criteria were instrumental in delivering the best possible result in terms of the total consideration to the client;
(g) an explanation of how the investment firm has used any data or tools relating to the quality of execution including any data published under 27(10)(a) of Directive 2014/65/EU.
(h) An explanation of how the investment firm has used, if applicable, output of a consolidated tape provider established under Article 65 of Directive 2014/65/EU which will allow for the development of enhanced measures of execution quality or any other algorithms used to optimise and assess execution performances.

5. For the purpose of this Article:
(a) passive order means an order entered onto the order book that provided liquidity,
(b) aggressive order means an order entered onto the order book that took liquidity, and
(c) directed order means an order where a specific execution venue was specified by the client prior to the execution of the order.

RTS Annex i: Article 3

Format
Investment firms shall publish the information required in accordance with Article 2(1) to (4) on their websites, by filling in the templates set out in Annex II, in a machine-readable electronic format, available for downloading by the public and the information in accordance with Article 2(4) in an electronic format available for downloading by the public.

Regulatory Technical Standards - Annex I - Classes of financial instruments

Regulatory Technical Standards - Annex II - Table 1

Regulatory Technical Standards - Annex II - Table 2

Regulatory Technical Standards - Annex II - Table 3

Commodities Position Reporting System

Need to Report Commodities Positions to the Regulator

Commodities Reporting System

Be able to interface limits into the organisation

MIFIR Reporting System

Need to Implement a MIFIR Reporting Solution to one of the assigned ARM's

CTP Reporting System

Need to Implement a CTP Reporting Solution (across all products - also the the OTF's)

Connectivity to New Trading Venues

Ensure Trading Venues are live for clearing with the CCP's we want for the products we trade

Trading Venue Connectivity to CCPs

Build interfaces to the trading venues. Ensure speed of clearing)

Information Security

Ensure the Correct Information security is in place

Completed information Security Plan

High-Frequency Trading - Controls

Ensure the Correct Controls - technical and otherwise - are put in place around HFT

Direct Electronic Access - Controls

Direct Electronic Access Controls - technical and otherwise - are put in place around DEA

Test and Change Management Procedures

Trade Reporting System

Post Trade Reporting requirements for Investment Firms - Equity Trade Reporting