MiFID II Compliance: Same Buyer and Seller Reporting Explained
Key Takeaways
- Legitimate Exception: The same entity can appear as both buyer and seller in MiFID reports under delegated discretionary mandate structures without making the trade non-reportable.
- Delegation Chain Logic: The scenario arises when one investment firm delegates decisions to another, which then routes execution back to the original firm.
- No-Ownership Misread: Some firms omit these trades because they assume no change of ownership means no reporting obligation, which the article rejects.
- Regulatory Interpretation: FCA guidance is presented as clear that these transactions remain reportable because the delegated execution relationship is distinct and visible.
- Process Review Need: Firms exposed to this pattern should reassess buyer-seller logic to ensure legitimate same-entity reports are not being suppressed.
In MiFID transaction reporting, buyer and seller are usually different entities. However, delegated discretionary mandate structures can legitimately produce reports where the same entity appears as both buyer and seller. This guide explains when that occurs and why the trade remains reportable.
In typical MiFID II transaction reporting, the buyer and seller in a transaction are separate entities. For most reports processed through Qomply's systems, this principle holds true. However, there are instances where the buyer and seller are reported as the same entity, a scenario addressed in the ESMA Q&As.
Understanding the Same Buyer and Seller in Reports
In cases where reports show the same buyer and seller, it typically occurs due to specific reporting structures within investment firms. One common instance occurs when a firm managing a discretionary mandate delegates decision-making authority to another investment firm.
In This Situation, Consider the Following Example:
- Firm A (Manager): The initial investment manager with decision-making responsibility.
- Firm B (Investment Firm): A firm to which Firm A has delegated investment decision-making under a discretionary mandate.
If Firm B then decides to pass the order back to Firm A for execution, Firm B would report Firm A as both the buyer (its client) and the seller (execution entity) within its transaction reports. This situation effectively captures both sides of the transaction as required, even though Firm A appears as both the buyer and seller.
We have seen instances where some firms have omitted reporting these transactions, mistakenly considering them exempt due to a perceived no change of ownership. However, FCA guidance emphasises that these transactions are indeed reportable, as they represent a distinct delegation and execution relationship and the perceived no change of ownership is simply due to the place within the chain that each executing entity is responsible for reporting.
Key Takeaway for Affected Firms
Firms affected by this scenario should review their reporting processes to ensure they comply with regulatory expectations. Specifically, firms should verify that any transactions in which the same entity is recorded as both buyer and seller are reported in line with MiFID II requirements, even if there appears to be no change in ownership. For firms using Qomply, our team is available to provide further guidance on handling such cases, ensuring your transaction reports meet regulatory standards and avoid compliance pitfalls.
How Qomply can help
Qomply’s Regulatory Reporting Hub combines regulatory expertise with AI, automation and data analytics to deliver scalable, audit-ready reporting intelligence that reduces errors, lowers remediation costs, and minimises operational and regulatory risk.
Covering regimes including MiFIR, EMIR Refit, SFTR, CFTC, CSA, MAS, ASIC and HKMA, Qomply also offers a fully managed service and operates globally from London.
Frequently asked questions
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Yes, it can. The article says this can happen legitimately in delegated discretionary mandate structures.
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It uses a scenario where Firm A delegates investment decision-making to Firm B, and Firm B then passes the order back to Firm A for execution. The article says Firm B would report Firm A as both buyer and seller in that case.
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It says some firms wrongly view the trade as exempt because there appears to be no change of ownership. The article says FCA guidance makes clear that these transactions are still reportable because of the delegation and execution relationship.
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It says the appearance comes from the point in the execution chain that each investment firm is responsible for reporting. The article makes clear that this reporting perspective does not remove the obligation to report.
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They should review their reporting processes to make sure these delegated discretionary mandate transactions are still being reported correctly. The article says firms should not treat them as exempt just because the same entity appears on both sides.
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