Topic Authorisation Data reporting services providers
With the entry into force of the European Markets in Financial Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR), the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) will assume new duties in relation to the authorisation and supervision of data reporting services providers from 3 January 2018.
Data reporting services providers play a role in the fulfilment of publication and reporting requirements which investment firms and operators of trading venues are obliged to fulfil pursuant to MiFIR. Their regulation is intended to improve trade transparency and promote a more integrated European market.
There will be three kinds of data reporting services providers:
- Approved publication arrangement (APA): Investment firms are obliged pursuant to MiFIR to publish certain information on APAs within the context of over-the-counter post-trade transparency.
- Consolidated tape provider (CTP): CTPs may consolidate into a continuous electronic data stream the data published by investment firms or operators of trading venues pursuant to MiFIR and make this available to the public.
- Approved reporting mechanism (ARM): As an alternative to their own reporting system, investment firms can also make use of an ARM in fulfilment of their reporting requirements regulated for in MiFIR.
MiFID II (Title V, Articles 59 to 66) requires the provision of data reporting services by data reporting services providers to be authorised and supervised by the relevant authorities. At the same time, data reporting services explicitly do not constitute a new kind of investment or ancillary service. Instead, data reporting services providers are emerging as a new, separate category of service provider alongside investment firms and market operators.
Investment firms and market operators which operate a trading venue will be able to avail themselves of a concession. Approval for the provision of data reporting services will be included in their existing authorisation as trading venue operators. In these cases, however, MiFID II provides for an assessment by the supervisory authority that these investment firms must also meet the authorisation conditions.
The requirements for data reporting services providers arising from MiFID II will be implemented within the scope of the Second German Act Amending Financial Market Regulations (Zweites Finanzmarktnovellierungsgesetz – 2nd FiMaNoG) through changes to the German Banking Act (Kreditwesengesetz – KWG), to the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and to the German Act Establishing the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz – FinDAG).
Applications for data reporting services providers
BaFin cannot accept or process formal applications for authorisation and for an assessment of whether the authorisation conditions have been met until after the entry into force of the legal provisions governing competence, in other words as soon as the KWG has been amended by the 2nd FiMaNoG.
In order to allow a smooth transitional period for companies which wish to operate as data reporting services providers from 3 January 2018, the KWG will likely contain transitional provisions which provide for notional authorisation for these companies, provided the latter submit a complete application for authorisation by 2 July 2018.
BaFin, however, accepts and preliminarily assesses draft applications since 1 March 2017. The forms found in Annex I and II of the draft Implementing Technical Standard (ITS 3) and translated by BaFin into German for this matter should be used for this.
Applications, including in draft form, should be submitted in German.
The Regulatory Technical Standard (RTS 13) includes information on the documentation to be submitted with the draft application.
Draft applications can be sent to the following addresses:
by e-mail: Datenbereitstellungsdienste@bafin.de
or by post:
Bundesanstalt für Finanzdienstleistungsaufsicht
Referat WA 35 – Datenbereitstellungsdienste
60439 Frankfurt am Main