What reports do investment firms have to prepare and who do they have to report to?

Investment firms are required to submit at least on a daily basis a complete breakdown of their positions held in commodity derivatives, emission allowances or derivatives thereof traded on a trading venue and economically equivalent OTC contracts, as well as of those of their clients and the clients of those clients until the end client – i.e. the position holders – is reached. The end client is the first non-financial client in the reporting chain. If there are other persons that follow, it may be advantageous for the end client to disclose the other persons' positions as well to avoid giving the impression that the end client has a high position itself.

It is also possible to outsource OTC position reporting to third parties.

The recipient of the reports to be prepared separately for each commodity derivative is, in each case, the authority that acts as the competent or central competent authority for a specific commodity derivative and thus also sets the position limit. The trading venue on which the financial product with the highest liquidity is traded needs to be determined for this purpose. The reports have to be submitted to the competent authority of the Member State in which the trading venue operator is established. Section 57 (4) sentence 2 of the new version of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) exhaustively regulates to whom investment firms have to submit daily reports on a specific commodity derivative. Due to the described regulations regarding the competent or central competent authority, investment firms may have to contact the authorities in other Member States in some circumstances. The authority that is to be contacted may also differ depending on the commodity derivative.

The format of daily reports to be submitted by investment firms pursuant to Article 58 (2) of Directive 2014/65/EU (MiFID II) in conjunction with section 57 (4) ff. of the new version of the WpHG is defined in detail in Article 2 ff. of Commission Implementing Regulation (EU) 2017/1093.

Who is subject to the reporting obligations?

The obligation to report to BaFin under section 57 (4) ff. of the new version of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) directly concerns only investment firms operating in Germany and trading commodity derivatives, emission allowances or derivatives thereof outside a trading venue.

In keeping with the EU provisions in Article 58 (2) of Directive 2014/65/EU (MiFID II), other Member States have to create similar regulations which may impose an obligation on investment firms established in this Member State to report to BaFin if they are trading commodity derivatives, emission allowances or derivatives thereof and economically equivalent OTC contracts outside a trading venue for which BaFin is the competent or central competent authority.

In order to ensure that investment firms are able to fulfil their reporting obligations, section 57 (1) of the new version of the WpHG requires clients to report to the investment firm the details of their own positions in commodity derivatives traded on that trading venue, on a daily basis, as well as those of their clients and the clients of those clients until the end client is reached. This is the only way to ensure that investment firms have all the information they are legally required to report to the competent authority such as BaFin.

How should investment firms submit reports to BaFin?

Article 3 of Commission Implementing Regulation (EU) 2017/1093 stipulates that the reports are to be submitted in a standard XML format. A template for this can be downloaded via the following link.

When submitting reports on an ongoing basis, investment firms that are established in Germany and trading commodity derivatives, emission allowances or derivatives thereof outside a trading venue must use the reporting system set up by BaFin. This is described in more detail in the information on the specialised procedure "Position limits in commodity derivatives and reporting”. A guidance notice has also been provided for this purpose and includes the technical requirements for submitting the information required.

To make use of this specialised procedure, it is necessary to register with BaFin's reporting and publishing platform (MVP Portal).