Approved Publication Arrangement (APA)
European Union Electricity Market Glossary

 


 

 

Approved publication arrangement (APA) is a person authorised under the provisions established in the MIFID II Directive to provide the service of publishing trade reports on behalf of investment firms (Article (4)(1)(52) MiFID II).

 

APAs are designed to provide services to an investment firm in order for it to meet its obligations under Articles 20 and 21 MiFIR. 

 

APAs, Approved Reporting Mechanisms (ARMs) and Consolidated Tape Providers (CTPs) are new categories of Data Reporting Services Providers (DRSPs) that did not exist under MiFID I.

 

Article 20 of MiFIR states that, "investment firms which, either on own account or on behalf of clients, conclude transactions in shares, depositary receipts, ETFs, certificates and other similar financial instruments traded on a trading venue, shall make public the volume and price of those transactions and the time at which they were concluded. That information shall be made public through an APA".

 

A similar obligation is placed by Article 21 of MiFIR on investment firms in relation to bonds, structured finance products, emission allowances and derivatives traded on a trading venue.

 

The APA is required to have adequate policies and arrangement in place to make public the information required under Articles 20 and 21 MiFIR as close to real time as is "technically possible" on a "reasonable commercial basis" (the latter term clarified by Article 6 of the Commission Delegated Regulation (EU) 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions and Articles 84-89 of the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive).

 

The information shall be made available free of charge 15 minutes after the APA has published it.

 

The home Member State must require the APA to be able to efficiently and consistently disseminate such information in a way that ensures fast access to the information, on a non-discriminatory basis and in a format that facilitates the consolidation of the information with similar data from other sources.

 

 

Authorisation and organisational requirements for APA's

 

 

There are separate but similar authorisation and organisational requirements for providers of data services (APAs, ARMs, and CTPs).

 

The rules focus on ensuring the integrity and security of the data these entities will handle.

 

Commission Delegated Regulation (EU) 2017/571 of 2 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on the authorisation, organisational requirements and the publication of transactions for data reporting services providers specifies the data publication requirements applicable to APAs (and CTPs), and in particular:

 

- rules on authorisation, including the information on organisation and corporate governance;

 

- organisational requirements, including conflict-of-interest rules, outsourcing, and business continuity, testing and capacity, security and management of incomplete or potentially erroneous data;

 

- as regards provisions on publication arrangements, the provisions cover machine readability, provisions on scope of data and rules to avoid data duplication and non-discriminatory publication.

 

 

APAs/ARMs

 

 

What is the difference between APAs and ARMs? APAs are firms who make public the details of transactions in financial instruments, while ARMs stand for firms who report the details of transactions to regulators for the purposes of market abuse surveillance.

 

In other words, both business vehicles: APAs as well as ARMs are designed to provide services to an investment firm in order for it to meet its obligations under MiFIR, but the respective MiFIR obligations for APAs are Articles 20 and 21, whereas the purpose of ARMs is to provide services enabling reporting obligations under Article 26 MiFIR.

 

There are also operational differences: whereas APAs and ARMs both are required to check investment firms' submissions for errors as well as to request resubmission if there are any issues, it appears that delegation to APAs takes responsibility away from investment firms while delegation to ARM does not (see: Norton Rose, MiFID II / MiFIR: Your Survival Guide Market Structures – Tying it All Together, p. 21).

 

Another difference is that APAs are under the obligation to disseminate information efficiently and consistently in a way that ensures fast access on a non-discriminatory basis in a format that facilitates consolidation from other sources, while ARMs have no regulatory duties to facilitate consolidation of data from other sources.

 

 

Investment firms making public their transactions through more than one APA

 

 

 

 

Commission Delegated Regulation (EU) 2017/571 of 2 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on the authorization, organisational requirements and the publication of transactions for data reporting services providers

 

 

Recital 22

 

 

(22) With respect to equity and equity-like instruments, Regulation (EU) No 600/2014 does not exclude that investment firms make public their transactions through more than one APA. However, a specific arrangement should be in place to enable interested parties consolidating the trade information from various APAs, in particular CTPs, to identify such potential duplicate trades as otherwise the same trade might be consolidated several times, and published repeatedly by the CTPs. This would undermine the quality and usefulness of the consolidated tape.

 

 

 

 

Details to be published by APAs

 

 


The information made public by an APA is required to include, at least, the following details (Article 64(2) MiFID):

 

(a) the identifier of the financial instrument;

 

(b) the price at which the transaction was concluded;

 

(c) the volume of the transaction;

 

(d) the time of the transaction;

 

(e) the time the transaction was reported;

 

(f) the price notation of the transaction;

 

(g) the code for the trading venue the transaction was executed on, or where the transaction was executed via a systematic internaliser the code 'SI' or otherwise the code 'OTC';

 

(h) if applicable, an indicator that the transaction was subject to specific conditions.

 

Details to be published by APAs are further specified in Article 18 of the aforementioned Commission Delegated Regulation (EU) 2017/571 of 2 June 2016.

 

Pursuant to the said provision an APA shall make public:

 

(a) for transactions executed in respect of shares, depositary receipts, ETFs, certificates and other similar financial instruments, the details of a transaction specified in Table 2 of Annex I to Commission Delegated Regulation (EU) 2017/587 of 14.7.2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments and on transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser and use the appropriate flags listed in Table 3 of Annex I to the said Regulation;

 

(b) for transactions executed in respect of bonds, structured finance products, emission allowances and derivatives the details of a transaction specified in Table 1 of Annex II to Commission Delegated Regulation (EU) 2017/583 of 14.7.2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives and use the appropriate flags listed in Table 2 of Annex II to the said Regulation.

 

Where publishing information on when the transaction was reported, an APA must include the date and time, up to the second, it publishes the transaction.

 

An APA that publishes information regarding a transaction executed on an electronic system must include the date and time, up to the millisecond, of the publication of that transaction in its trade report.

 

An 'electronic system' is understood in this context as a system where orders are electronically tradable or where orders are tradable outside the system provided that they are advertised through the given system.

 

Timestamps referred to above must, respectively, not diverge by more than one second or millisecond from the Coordinated Universal Time (UTC) issued and maintained by one of the timing centres listed in the latest Bureau International des Poids et Mesures (BIPM) Annual Report on Time Activities.

 

APA must ensure that the information, which has to be made public, is sent through all distribution channels at the same time, including when the information is made public as close to real time as technically possible or 15 minutes after the first publication.

 

 

Publication of transactions concluded on third country trading venues and OTC bilateral transactions concluded by EU investment firms with non-EU firm

 

 

Third-country information made public in the European Union through an APA includes:

 

a. OTC bilateral transactions concluded by EU investment firms with non-EU firms, and

 

b. transactions concluded on third country trading venues that are not included in the Annex to the ESMA's Opinion.


Transactions concluded by the EU firms on third-country trading venues included in Annex to the ESMA's Opinion (which are considered to have transparency provisions similar to those applicable to EU trading venues under the MiFID II/MiFIR framework) are not required to be made public in the EU through an APA.

 

The aforementioned criteria for identification of third-country trading venues, which are subject to similar post-trade transparency requirements as EU trading venues cover the following metrics:

 

- it operates a multilateral system, i.e. a system or facility in which multiple third-party buying and selling interests in financial instruments are able to interact;


- it is subject to authorisation in accordance with the legal and supervisory framework of the third-country;


- it is subject to supervision and enforcement on an ongoing basis in accordance with the legal and supervisory framework of the third-country by a competent authority that is a full signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU); and,


- it has a post-trade transparency regime in place which ensures that transactions concluded on that trading venue are published as soon as possible after the transaction was executed or, in clearly defined situations, after a deferral period.

 

ESMA intends to publish a list of trading venues that meet the criteria stated above.

 

That list will be published in an Annex to the ESMA's Opinion and will be updated on an ongoing basis (ESMA Opinion, Determining third-country trading venues for the purpose of transparency under MiFID II / MiFIR, 31 May 2017, ESMA70-154-165).

 

Any identification of trading venues for the purposes of the consistent application of the post-trade transparency requirements set out in MiFIR as set out above does not in any way prejudice an equivalence assessment performed by the European Commission under MiFID II/MiFIR and, in particular, any equivalence assessment of third-country trading venues for the purposes of the trading obligations for shares and derivatives, in accordance with Article 25(4)(a) of MiFID II and Article 28(4) of MiFIR.

 

 

Cancellation and amendments in trade reports

 

 

 

Commission Delegated Regulation (EU) 2017/571 of 2 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on the authorization, organisational requirements and the publication of transactions for data reporting services providers

 

Recital 16

 

(16) APAs and CTPs should be able to delete and amend the information which they receive from an entity providing them with information to deal with situations where in exceptional circumstances the reporting entity is experiencing technical difficulties and cannot delete or amend the information itself. However, APAs and CTPs should not otherwise be responsible for correcting information contained in published reports where the error or omission was attributable to the entity providing the information. This is due to the fact that APAs and CTPs cannot know with certainty whether a perceived error or omission is indeed incorrect since they were not party to the executed trade.

 

Article 10 


Management of incomplete or potentially erroneous information by APAs and CTPs

 

1. APAs and CTPs shall set up and maintain appropriate arrangements to ensure that they accurately publish the trade reports received from investment firms and, in the case of CTPs, from trading venues and APAs, without themselves introducing any errors or omitting information and shall correct information where they have themselves caused the error or omission.

 

2. APAs and CTPs shall continuously monitor in real-time the performance of their IT systems ensuring that the trade reports they have received have been successfully published.

 

3. APAs and CTPs shall perform periodic reconciliations between the trade reports they receive and the trade reports that they publish, verifying the correct publication of the information.

 

4. An APA shall confirm the receipt of a trade report to the reporting investment firm, including the transaction identification code assigned by the APA. An APA shall refer to the transaction identification code in any subsequent communication with the reporting firm in relation to a specific trade report.

 

5. An APA shall set up and maintain appropriate arrangements to identify on receipt trade reports that are incomplete or contain information that is likely to be erroneous.
These arrangements shall include automated price and volume alerts, taking into account:
(a) the sector and the segment in which the financial instrument is traded;
(b) liquidity levels, including historical trading levels;
(c) appropriate price and volume benchmarks;
(d) if needed, other parameters according to the characteristics of the financial instrument.

 

6. Where an APA determines that a trade report it receives is incomplete or contains information that is likely to be erroneous, it shall not publish that trade report and shall promptly alert the investment firm submitting the trade report.

 

7. In exceptional circumstances APAs and CTPs shall delete and amend information in a trade report upon request from the entity providing the information when that entity cannot delete or amend its own information for technical reasons.

 

8. APAs shall publish non-discretionary policies on information cancellation and amendments in trade reports which set out the penalties that APAs may impose on investment firms providing trade reports where the incomplete or erroneous information has led to the cancellation or amendment of trade reports.

 

An APA is required to set up and maintain appropriate arrangements to identify on receipt trade reports that are incomplete or contain information that is likely to be erroneous.


The EU Regulation 2017/571 of 2 June 2016 envisions that the said arrangements must include automated price and volume alerts, taking into account:


(a) the sector and the segment in which the financial instrument is traded;


(b) liquidity levels, including historical trading levels;


(c) appropriate price and volume benchmarks;


(d) if needed, other parameters according to the characteristics of the financial instrument.


Where an APA determines that a trade report it receives is incomplete or contains information that is likely to be erroneous, it must not publish that trade report and is required to promptly alert the investment firm submitting the trade report.


APAs is authorised to delete and amend information in a trade report in exceptional circumstances only and always upon request from the entity providing the information when that entity cannot delete or amend its own information for technical reasons.


APAs is required to publish non-discretionary policies on information cancellation and amendments in trade reports, which set out the penalties that APAs may impose on investment firms providing trade reports where the incomplete or erroneous information has led to the cancellation or amendment of trade reports.

 

 

APA's participation in the portfolio compression process

 

 

APAs are also envisioned to play a role in the portfolio compression.

 

It is the matter of Article 18 Commission Delegated Regulation (EU) of 18.5.2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions, which provides for some publication requirements for each portfolio compression cycle performed by investment firms and market operators.

 

Information to be made public through the APA (as close to real-time as is technically possible and no later than the close of the following business day after a compression proposal becomes legally binding) includes:

 

(a) a list of derivatives submitted for inclusion in the portfolio compression,

 

(b) a list of derivatives replacing the terminated derivatives,

 

(c) a list of derivatives changed or terminated as a result of the portfolio compression,

 

(d) the number of derivatives and their value expressed in terms of notional amount.

 

The information referred to above must be disaggregated per type of derivative and per currency.

 

 

APA's quote streaming and order execution services to systematic internalisers and their clients

 

 

In the in Questions and Answers on MiFID II and MiFIR market structures topics of 7 July 2017 (ESMA70-872942901-38) ESMA referred to a situation where APAs proposed setting up arrangements which, on top of their APA services, provide a suite of quote streaming and order execution services to systematic internalisers (SIs )and their clients (in this set-up clients could not interact with more than one SI via a single message but could send multiple messages to multiple SIs participating in the service provided).

 

This was in the context of Articles 14(1) and 18(1) of MIFIR, which require SIs to make public firm quotes, which may be published through an APA.

 

In the ESMA opinion, a system that provides quote streaming and order execution services for multiple SIs is a multilateral system and is required to seek authorisation as a regulated market, MTF or OTF in accordance with Article 1(7) of MiFID II.

 

 

 

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Last Updated on Monday, 10 July 2017 21:24
 

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