The Data Reporting Services Regulations 2017

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations implement Title V of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (recast) (OJ no L173, 12/6/2014, p349) (“MiFID 2”).

“Data reporting services” is defined in regulation 2. An approved publication arrangement (“APA”) enables investment firms to meet their obligations to publish trade reports under Articles 20 and 21 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (OJ L173, 12/6/2014, p84) (“MiFIR”). The information must initially be published on a reasonable commercial basis and after 15 minutes without charge. An approved reporting mechanism (“ARM”) provides services to investment firms to enable them to meet their transaction reporting obligations. A consolidated tape provider (“CTP”) is a business which collates all the transaction data which must be made available by regulated markets, multilateral trading facilities and organised trading facilities (“trading venues”) and investment firms (as published by APAs) under MiFIR and makes that available to the public as a continuous data stream. That data stream must be made available to the public on a reasonable commercial basis. A business providing APA, ARM or CTP services must be authorised under these Regulations.

Regulation 3 gives effect to Article 93 of MiFID 2 which provides that requirements on CTPs relating to the reporting of non-equity financial instruments do not commence until 3rd September 2019.

Regulation 4 enables the Financial Conduct Authority (“FCA”) to enforce directly applicable requirements imposed on data reporting service providers under MiFIR and directly applicable EU Regulations made under MiFID 2 and MiFIR.

Regulation 5 prohibits the provision of data reporting services except by persons who are—

• authorised under these Regulations;

• EEA data reporting service providers authorised in their home state and who are exercising their right to provide such services in the United Kingdom under Article 60 of MiFID 2; or

• authorised investment firms, credit institutions or recognised investment exchanges (in each case when operating a trading venue) where the FCA has verified that the firm complies with Title V of MiFID 2.

Regulation 6 requires the FCA to keep a register of data reporting service providers.

Regulations 7 to 12 provide for the making of applications for authorisation as a data reporting service provider to the FCA, the information which must be provided with applications, the conditions for authorisation, the process to determine applications, and when authorisations may be cancelled or varied. They also make provision relating to verifications by the FCA for the purposes of Article 59.2 of MiFID 2. Article 59.2 is a derogation from the authorisation requirement for investment firms, credit institutions and recognised investment exchanges operating a trading venue which comply with Title V of that directive.

Part 3 transposes operating conditions set out in Articles 63 to 66 of MiFID 2 for APAs, ARMs and CTPs.

Chapter 1 of Part 4 confers functions and enforcement powers on the FCA, which is designated as the competent authority for the purposes of Title V of MiFID 2. The functions include monitoring of compliance with and enforcement of these Regulations and giving guidance. The FCA may make a statement of public censure, impose financial penalties, and restrict the ability of a data reporting service provider to provide those services. This Chapter also contains criminal offences in respect of a breach of the requirement to be authorised under these Regulations and in respect of misleading the FCA.

Chapters 2 and 3 of Part 4 apply provisions of the Financial Services and Markets Act 2000 (c.8) in respect of the Regulations, including Part 9 (Upper Tribunal hearings and appeals), Part 11 (information gathering and investigations), Part 25 (injunctions and restitution), Part 27 (offences), provisions relating to the disclosure of confidential information and FCA fees, and related secondary legislation.

Regulation 46 provides that data reporting service providers authorised in Gibraltar are to be treated under these Regulations as if they have been authorised in an EEA State other than the United Kingdom.

Regulation 48 requires the Treasury to review these Regulations every five years.

A transposition note setting out how MiFID 2 is transposed into UK law is available from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ and is published on www.legislation.gov.uk alongside these Regulations.

A full impact assessment of the effect that these Regulations will have on the costs of business and the voluntary sector is available from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ or on www.gov.uk and is published alongside these Regulations on www.legislation.gov.uk.