CySEC Advanced Chapter 8 Flashcards: MiFIR (2014) | ExamPass CY

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What is MiFIR and how does it relate to MiFID II?: MiFIR is Regulation (EU) 600/2014; together with the MiFID II directive it forms the MiFID II framework. As a regulation, MiFIR applies directly in all member states without national transposition.
To which entities does MiFIR apply?: Investment firms, credit institutions (for investment services), market operators, CCPs (Title VI only), persons with proprietary rights to benchmarks, and third-country firms under equivalence (Title VIII only).

What pre-trade information must a venue publish continuously for equity instruments?: The current bid and offer prices and the depth of trading interest at those prices, during normal trading hours, on reasonable commercial and non-discriminatory terms.
Which trading systems are calibrated for equity, and what is added for non-equity?: For equity: order-book, quote-driven, hybrid and periodic auction. For non-equity instruments, voice trading systems are added.
What are the main pre-trade transparency waivers for equity?: The reference price waiver (price derived from the primary/most liquid venue), the negotiated transactions waiver, orders large in scale above normal market size, and orders held in an order management facility pending disclosure.
How is the reference price defined for formalised negotiated transactions?: The midpoint between the current bid and offer; where no current price is available, the midpoint of the closing bid and offer from the last session.
What is the notification procedure before CySEC grants a pre-trade waiver?: CySEC must notify ESMA at least four months before the intended start date. ESMA issues a non-binding opinion within two months.

What are the two levels of the MiFIR double volume cap for dark trading?: 4% of total EU trading in the instrument (over the previous 12 months) per individual venue, and 8% across all EU venues.
What happens when a volume cap is exceeded?: The competent authority must suspend use of the waiver within two days, and the suspension lasts six months. Early-warning reports are triggered at 3.75% (per venue) and 7.75% (EU-wide).

What details of executed equity transactions must be made public in near real-time?: The price, volume and time of the transaction. The identities of the parties are NOT made public — they are reported privately to regulators via transaction reporting.
Who may authorise deferred publication of transaction details?: CySEC — with prior approval. The operator must disclose the deferral arrangements to market participants and the public.
What counts as a non-equity instrument under MiFIR?: Bonds, structured finance products, emission allowances and derivatives.

When must a systematic internaliser (SI) make public firm quotes?: For instruments with a liquid market. Where there is no liquid market, the SI need only provide quotes to clients on request.
What are the quote requirements and minimum size for an SI?: Quotes must be firm and include a bid and offer price for sizes up to standard market size, with a minimum quote size of at least 10% of standard market size. Dealing above standard market size is exempt from the SI transparency regime.
How is standard market size determined, and how is SI status notified/reviewed?: By the arithmetic average value of orders executed in the EU market for those instruments, excluding large-in-scale orders. A firm notifies CySEC, which transmits to ESMA (which keeps the EU register); SI status is reviewed at least annually.

How long must investment firms and trading venues keep order and transaction records under MiFIR?: At least five years. For client transactions, records must also include client identity and all information required for anti-money-laundering purposes.

What is the MiFIR deadline for reporting completed transactions?: As soon as possible, and no later than the close of business of the following working day (T+1).
What is the scope of MiFIR transaction reporting, and where must transactions occur?: Instruments admitted to or traded on a trading venue, instruments whose underlying is traded on a venue, and instruments based on an index/basket of traded instruments — reported regardless of whether traded on a venue or OTC.
What key identifiers must a MiFIR transaction report include?: The client on whose behalf the transaction was executed (including LEI for legal persons), the persons and algorithms responsible for the investment decision and execution, a short-sale flag for shares and sovereign debt, and a risk-reduction indicator for commodity derivatives.
Through which channels may a firm submit transaction reports, and who corrects errors?: Itself, an approved reporting mechanism (ARM) acting on its behalf, or the trading venue through whose system the transaction was completed. The party that submitted the report must correct and resubmit any errors or omissions.
When must financial instrument reference data be submitted to CySEC?: Before trading commences in the instrument, and updated whenever the data changes. CySEC forwards it to ESMA, which publishes it.

Where must in-scope derivatives be traded under MiFIR, and how far does the obligation reach?: On regulated markets, MTFs, OTFs, or EC-approved equivalent third-country venues. The obligation extends to contracts on a third-country exchange that have a direct, substantial and foreseeable effect within the EU.
Who ensures CCP clearing of derivatives on a regulated market, and how quickly?: The operator of the regulated market. Trades must be submitted and accepted for clearing as quickly as technologically practicable using automated systems.
How is portfolio compression treated under MiFIR?: It is not subject to the best-execution obligation or the obligation to trade on RM/MTF/OTF (it is a risk-reduction exercise, not new market risk). Volume and timing must still be made public via an APA in near real-time.