All you need to know about MIFID II Position Limits reporting.
The outcome can be found in the ITS 4: Draft implementing technical standards on position reporting (Article 58(5) of MiFID II) document, which is currently before the European Commission, awaiting its endorsement.
ITS includes suggested forms for daily and weekly reports and lists the fields and required identificators (such as Market Identifier Code (MIC), Legal Entity Identifier (LEI) and International Securities Identification Number (ISIN)). Both types of reports must be submitted in XML format, which was largely endorsed by the industry.
The aim of the reporting standardisation across the industry is to enable ESMA, and other relevant authorities carry out their duties effectively. The regulators need to be able to compare data across investment firms and market operators operating trading venues since they are ultimately responsible for position limits monitoring.
In the case of a weekly report, the document should show a complete breakdown of positions, identifying those which can be categorised as risk-reducing directly related to commercial activities, other and total positions. The objective is to provide transparency in regard to financial and non-financial activities.
The daily reports should expose a breakdown of investment firms’ and their clients’ positions, specifying details of all positions across all maturities of all contracts, separately for spot and other months’ contracts.
Investment firms should not add positions held by their clients to their own positions for reporting purposes. Entity-by-entity reporting is encouraged, although investment firms may not always be able to disaggregate end-client’s positions. Further, there is no obligation on non-investment firms to provide disaggregated positions. Importantly, every person holding a position in a commodity derivative is subject to the position limits even if their positions are aggregated in the reporting process.
A list of data fields for daily reports
The table lists the most relevant data fields that will need to be provided in the daily reports prepared by investment firms.