What is MiFID II transaction reporting?
Transaction reporting is where we have to report post-trade transaction information to the regulators, providing transparency to help them detect and deter market abuse. MiFID II increases the quantity of data to report and the scope of transactions which are reportable.
Reportable assets, at present, on FundsNetwork are Exchange Traded Products (ETFs and ETCs) and Investment Trusts.
What are the requirements to invest in reportable assets?
It is your responsibility to carry out the requirements laid down by MiFID II appropriately, in terms of capturing important information on nationality and identifiers for your clients and associated parties. This will enable us to trade in reportable assets on your behalf for your clients.
You must provide us with all nationalities your clients hold – additionally we require their national identifier. This information is required if a client is executing trades in an exchange traded instrument, that is subject to transaction reporting. In order to trade on the FundsNetwork Pension, this information must be provided for all instructions whether on reportable assets or not. Please note: transactions include buys, sells, regular savings plans, withdrawal plans, dividend re-investments and any fees coming directly from these assets.
Nationality and identification data needs to be provided for the client and any person or entity making an investment decision on behalf of the client – known as the 'decision maker'. For an entity we will need the LEI but will also need details of the individual within the investment firm who make investment decisions for clients on a discretionary basis. We will require the full name, date of birth, confirmation of their reportable nationality and the appropriate
Regulatory reporting needs to identify corporate entities and trusts (excluding bare trusts), for clients or decision makers, by means of a Legal Entity Identifier (LEI) as opposed to a national identifier.
Without this information, we will not be able to execute a trade in a reportable asset.
What new information is required for individual clients?
If your clients transact in reportable assets the following is required:
We require all nationalities a client has for Anti-Money Laundering regulations. With MiFID II, we are now required to provide a nationality identifier to the Financial Conduct Authority (FCA). Our system identifies, based on the nationalities that have been input, which one is reportable to the FCA. You can use our Account Opening checklists to capture these details in client meetings.
On the basis of this, you will be asked for an individual identifier, linked to the reportable nationality. This will consist of up to three options which are dependent on nationality.
Please refer to this factsheet
(also available in the guides section above) to determine the national identifier that is needed for a client or decision maker, depending on the nationalities they hold.
What is the new information required for non-individual clients?
Most non-individual clients will need to obtain and provide a Legal Entity Identifier (LEI).
Read more information about LEI’s and how to obtain them.†
† By clicking on the link you will be leaving Fidelity's website. Fidelity is not responsible for the content of external internet sites.
Bare Trusts are treated in the same way as individual clients rather than non-individual clients, therefore a LEI is not required. However, they have to declare the nationalities and national identifiers of both trustees and beneficiaries (as per an individual client).
How can I provide FundsNetwork with the additional client detail?
The following explains how we will collect the information:
- It is now mandatory as part of all dealing journeys to provide the new information when trading on an exchange traded instrument, and for all trades on the FundsNetwork Pension
- You can provide details for individual clients outside of a dealing journey within the latest version of client management. To help you identify clients who hold investment trusts or ETFs, please see our new ‘Account Information’ report, which is available through ‘Manage Reports’ on client management. This report has already been made available to your firm, therefore there is no need to request it
- Information is captured on relevant application forms.
From when will you be requesting Legal Entity Identifiers (LEIs) from advisers and eligible investors?
We have provided the option to accept LEI information within ‘client management’ under the 'Manage Client Profile' option. It is now mandatory as part of all dealing journeys to provide the new information when trading in reportable assets and we now capture this information on the relevant application forms. For our DFM's, their relationship manager will be handling their requirements directly. Please note LEI's are not needed for advisers who only provide investment advice.
How do I provide FundsNetwork with my firm’s decision maker details?
Unfortunately at this time we are unable to capture these details online. We will provide a form to you to capture the required information and return to us. However, please be aware that to enable the correct reporting of this information we will require your firm to use our discretionary model portfolio service and to issue you with a new UAN and log-in details.
Why do I need to use model portfolios to correctly report?
Our current functionality available to support discretionary transactions that are reportable to the FCA is restricted to our discretionary model portfolio service. This is something that we are monitoring the use of and dependent upon the level of use, would expect to enhance the functionality of in the near future.
How do I set-up the discretionary model portfolios and link my clients?
A member of our team will be in contact with you to guide you through this process.
What about the reportable transactions since 3rd January? Have these not been reported (correctly)?
All transactions since the 3 January have been reported to the FCA but as we did not have/were unable to capture the LEI and decision maker details for your company previously, these details were not included in our transaction report. Upon confirmation from your firm we will be able to re-report these trades with the LEI and decision maker details you provide. Upon confirmation that the current decision maker can be used for re-reporting, we will check for historical transactions made on all clients linked to your discretionary models. The original transaction report will be cancelled and replaced with an updated report to include your LEI and decision maker details.
What if the clients I link to the discretionary model portfolio were not historically discretionary clients?
Please notify your contact of any clients who were either non-discretionary during the period from 3 January 2018 to date or who were discretionary from this date but no longer are i.e. they are not linked to a discretionary model now. We will endeavor to correct the historical transaction reports to reflect your requirements.
What if the decision maker I have provided for the discretionary model portfolio is not the decision maker for the historic transactions?
We will require the same name, date of birth, nationality and national identifier details for any previous decision maker. We will use these details to re-report the historic transactions back to the 3 January 2018 for all clients now linked to the discretionary model portfolio.
I have self-reported the reportable transactions historically (since January 2018). What do I need to do?
If you have already reported your client’s transactions to the FCA, we will have duplicated the reporting of these transactions and we will have reported incorrectly. Please provide client and transaction details to your contact and we will correct our previously submitted report(s) to correct this. Once your discretionary model portfolios are set-up and in use please do not provide any further transaction reports to the FCA for your clients.
Why have you sent me a ‘discretionary adviser’ letter? I do not use my discretionary permissions on your platform?
Under MIFID rules the provision of portfolio management services results in the loss of the Article 3 exemption and therefore the firm is categorised as a MIFID investment firm. This results in the firm having to provide transaction reports for exchange traded/reportable transactions unless responsibility is passed to another MIFID entity (FASL) by means of a Transmission agreement. Our Terms of Business have been changed to ensure that all MIFID investment firms enter into a Transmission agreement with us to allow us to report on their behalf. When completing the Transaction report we have to then provide the LEI (Legal Entity Identifier) of the firm with whom we have entered the agreement as the trade ‘Transmitter’. This field is required for all reportable trades where the Adviser is a MiFID investment firm.
How will adviser LEIs be recorded?
Adviser Legal Entity Identifiers will be stored against the head UAN for the adviser and used in regulatory transaction reporting.
How will eligible investor LEIs for e.g. companies, trusts and charities be recorded?
Client Legal Entity Identifiers for corporate, trust and charity clients will be collected and stored against our client records and used as appropriate in our transaction reporting.
Will it be possible for me to run a report of all my clients to show who has provided the additional information, for example, National Insurance Numbers, Nationality, National Identifiers and LEIs?
Yes - our 'Client List' report, which is available online using 'Mange Reports', has been enhanced to indicate whether we hold the nationality and/or national identifier (including LEI) for your clients.
Will you need this information to allow trades on non-reportable investments from 3 January 2018?
For the FundsNetwork Pension we will require this information in order to trade on any asset within the pension. For other account types, we do not require this, although normal Anti-Money Laundering rules will still apply .
Can you clarify your position in respect of whether there are any implications for reporting for pensions under MiFID II?
If an asset held in the pension is reportable, then transaction reporting will be required. Where known we will report the end owner of the pension as the client for transaction reporting purposes, otherwise the Pension Trustee will be reported with their LEI.