Significant changes to the transaction reporting frameworks of the Markets in Financial Instruments Regulation (MiFIR) are underway in the European Union, marking the most substantial regulatory overhaul since MiFID II. Triggered by the MiFIR Review, which took effect in March 2024, the new and amended rules will expand the reporting universe and reshape data requirements.

The EU’s renewed transaction reporting regime amends Article 26 of MiFIR by expanding the scope of mandatory reporting to include centrally cleared over-the-counter (OTC) derivatives, regardless of trading venue. ESMA is leading the development of new technical standards, and the European Commission is expected to approve and publish the revised requirements by late 2025. This will be followed by a 12-month implementation window. Key changes include the addition of new reportable fields, such as the transaction's effective date and entity identifiers. These fields will be aligned with EMIR and SFTR requirements, and novel identifiers will be introduced to link related trades and transactions executed on or off trading venues. The overhaul will remove some duplicative or obsolete fields, bringing greater alignment of reporting with other reporting frameworks.

The regulatory focus is on data quality, simplification and facilitating surveillance. The 'report once' principle is gaining traction and is supported by streamlined data-sharing protocols and revised one-sided derivative reporting proposals. Until the new technical standards are formally adopted, firms must continue to comply with the existing transaction reporting schema to avoid compliance gaps and operational risk. The updates demand significant investment in IT systems and data infrastructure realignment, as well as proactive engagement with ongoing consultations.

In summary, MiFIR 3 is set to deliver substantial transformation by enhancing transparency and reducing systemic risk. Firms should closely monitor ESMA updates, allocate resources for systems upgrades and actively participate in industry consultations to ensure a smooth transition and ongoing compliance.

More details here – ESMA consults on transparency requirements for derivatives under MiFIR Review