ACRONYMS AHOY! MiFID II – Part 2: All things data

MiFID II multiplies the amount of data that must be collected, reported, published and transferred exponentially. Every time you breathe, you're probably inhaling a few hundred pieces of data floating round in the ether. And this wasn't done lightly: new data firms and identifiers were created, debated and continue to make the news. So if you want a recap on what's an ISIN and an LEI, what does DRSP stand for, and what's the difference between an ARM, APA and a CTP, this covers you.

ACRONYMS AHOY! MiFID II – Part 2: All things data

Post financial crisis, regulators around the globe realised there were large pockets of activity over which neither they nor the market had much visibility and the information they did have was not reported in as consistent or granular a way as they’d like. MiFID II, along with EMIR, is a large part of the EU’s fix to this and this means more data. More data because more instruments are brought into the regulatory scope, leading to more transaction and transparency reports, and more data because now a lot more information for each report must be provided than under the first MiFID. The common example here is that the number of fields in one transaction report has increased from around 25 to 65. And if you’re going to mandate a lot more data, you need firms to collect, report and publish it it, identifiers to identify it, and IT systems to manage it. Cue: a lot of work and a lot of acronyms.

If you’re looking for help with financial regulations and EU matters please contact me to discuss. I offer advisory, consultancy and training services.

The Data Firms

  • DRSP: data reporting service provider – collective name for APAs, ARMs and CTPs (see below). Whilst variations of these types of data firms existed pre MiFID II (such as ARMs in the UK), under MiFID II this trio have become a distinct new category of firms, requiring authorisation. Their purpose is to collect and provide the data required under MiFID II.
  • APAs: Approved Publication Arrangements: collect and publish details of trades executed Over-the-Counter (OTC). They are a source of post trade information for market participants (and enable them to meet the new post-trade transparency rules), giving information on the price, volume and time of trades executed outside a trading venue.
    • Examples: Bloomberg, Xtrakter, London Stock Exchange
  • ARMs: Approved Reporting Mechanisms: collect and send transaction reports to the relevant national regulator e.g. FCA, AMF, AFM etc.. These reports are confidential, used by regulators to monitor for market abuse.
    • Examples: Bloomberg, Xtrakter, London Stock Exchange
  • CTPs: Consolidated Tape Providers: collect, consolidate and publish details of trades executed both OTC and on trading venues (RMs, MTFs and OTFs). Like APAs, they are a source of post trade information for market participants and consolidate the post trade data from APAs and trading venues into one data stream. There are no CTPs in the EU to date, although CTPs have been around since the 1970s in the US and the EU’s aim is to have something similar.


Financial Instrument Identifiers and descriptors

  • AII: Alternative Instrument Identifier: an instrument code that was used to identify exchange traded derivatives (ETDs) under the first MiFID on certain EU trading venues, rather than the ISIN code. However, MiFID II requires the use ISINs and the AII is no longer used for MiFID reporting purposes.
  • CFI: Classification of Financial Instruments: a CFI is a six alphabetical character code used to classify a financial instrument in order to identify the type and characteristics of each financial instrument. 

    • Example: the CFI for HomeChoice International PLC, incorporated in Malta, is “ESVUPR“. The first character, ‘E’, indicates the generic category of the instrument, in this example ‘equities’. The second character indicates specific groups within the category, in this example “S” means the equity type ordinary shares. The last four characters indicate the attributes e.g. the “V” means ‘variable interest rate’ etc.
  • FISN: Financial Instrument Short Name: the purpose of the FISN is to provide a consistent  approach to standardising short names for financial instruments. The FISN is not an identifier but used to describe an instrument and is made up of a maximum 35 alpha-numeric characters. 
    • Example: the FISN for HomeChoice International PLC is “HOMECHOICE INT/EQ
  • ISIN: International Securities Identification Number: An ISIN is a unique identifier (12-character, alpha-numeric code) used to identify a specific issue of bonds, shares, futures, warrant, rights, etc.
    • Example: The ISIN for HomeChoice International PLC is “MT0000850108

And who issues them…?

  • ANNA: Association of National Numbering Agencies National Numbering Agencies: NNA: ISINs, CFIs and FISNs are issued by NNAs ( e.g. CSDs, clearing houses, exchanges etc.), all of which are members of an umbrella organisation called ANNA. The London Stock Exchange is the UK’s NNA.
  • DSB: Derivatives Service Bureau: ANNA set up the DSB in 2016 to generate ISINs in real-time for OTC derivatives, following the EU decision that the ISIN should be the identifier used for the new regulatory reporting requirements under MiFID II, MiFIR and MAR. Prior to MiFID II, ISINs were not used as OTC derivatives identifiers. However, as many OTC derivatives fall within MiFID II’s scope and the usual method of issuing ISINs did not work for these instruments, a different approach was required – hence the DSB was set up.

Counter-party identifiers

  • LEIs: Legal Entity Identifiers: An LEI is a unique identifier (20 character, alpha-numeric code) for legal persons e.g. companies, charities and trusts (see FAQ here). The use of LEIs was supported by the G20 after the financial crisis, when regulators worldwide found they could not identify parties to transactions and identify build-ups of systemic risk. Simply put, an LEI tells you who is party to a trade. Under MiFID II an LEI is required for the following:
    • EU investment firms must identify clients that are legal persons with LEIs for the purpose of MiFID II transaction reporting.
    • Trading venues must identify each issuer of a financial instrument traded on their platforms with an LEI code.

And who issues them..?

  • GLEIF: Global Legal Entity Identifier Foundation is a not-for-profit organisation set up by the Financial Stability Board in 2014, to support the implementation and use of LEIs.
  • LOU: Local Operating Unit are entities accredited by GLEIF to allocate LEIs. The London Stock Exchange, for example, is one LOU.

A word on ‘real’ persons:  the LEI is the identifier used for legal persons when they trade: for natural or “real” people who take part in a trade, other identifiers are used. For example, in the UK the national insurance number is used, in the Netherlands and Cyprus its the national passport number etc.

Trading Venue identifier

  • MIC: Market Identifier Code: a unique identification four alphabetical character code used to identify exchanges, trading platforms, regulated or non-regulate markets.
    • Example: XLON is the MIC code for the London Stock Exchange.

The IT systems

  • FIRDS: Financial Instrument Reference Data System. FIRDS is the IT system ESMA built to collect and provide reference data on financial instruments from across the EU. It collects data from EU national regulators (e.g. the FCA, AMF…), RMs, MTFs, OTFs, SIs, APAs and (if/when one is authorised) CTPs. The data is used to meet a range of MiFID II obligations such as perform transparency calculations, determine the LIS threshold. You can find find out more on FIRDS in various documents on ESMA’s website, start here.
  • MDP: Market Data Processor. The FCA’s (UK regulator), new MiFID II IT system which collects a range of different data reports from firms and trading venues (e.g. transaction reports, reference data…). The MDP also sends data to ESMA’s IT system (FIRDS) so that ESMA can consolidate data at EU level where appropriate. You can find out more about the MDP on the FCA’s website here.

In a nutshell…

  • the ISIN identifies the specific instrument,
  • the CFI tells you WHAT type of instrument it is
  • the FISN describes the instrument
  • The LEI or personal ID number tells you WHO traded it; and
  • The MIC code tells you WHERE it was traded


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