MiFID TVTIC Data Quality: Structure and Validity (RTS 22 Field 3)
Key Takeaways
- Targeted Data-Quality Focus: Regulators have run dedicated controls on TVTIC structure and validity, making Field 3 a specific supervisory data-quality priority.
- Membership Test: The quality exercise checks whether the reporting firm was actually a member of the venue whose MIC it cited in Field 36.
- Structure Validation: NCAs also test whether the reported TVTIC conforms to the structure defined by the relevant trading venue operator.
- Correction Consequence: The CSSF example shows poor TVTIC quality can lead directly to regulator-mandated corrections for multiple investment firms simultaneously.
- Control Response: Firms are increasingly adding venue-specific TVTIC structure checks, reflecting the operational reality that accepted reports can still contain material defects.
Recent Focus on TVTIC Structure and Validity
Regulators have run data quality controls specifically on Trading Venue Transaction Identification Code (TVTIC), RTS 22 Field 3, to confirm firms report a valid venue identifier that matches the venues structure. This article explains why TVTIC quality fails, how regulators test it using MIC codes and venue membership, and what controls firms can implement to prevent corrections and remediation.
It may be fair to assume this renewed activity and interest may be the result of ESMA's data quality exercise conducted in July 2021 in Europe.
In February 2022, this prompted the CSSF (Commission de Survelliance du Secteur Financier) in Luxembourg to release a statement that further explains the exercise and their subsequent actions.
"In June 2020, national competent authorities (NCAs), in collaboration with ESMA, performed a data quality control aiming at verifying the correctness of the trading venue transaction identification codes (TVTIC) populated in Field 3 of RTS 22. In order to continuously improve the quality of TVTICs provided in transaction reports, ESMA, together with the NCAs, decided to rerun this test in July 2021.
Concerning the applied methodology, each NCA focused, for a specific period, on transaction reports citing in Field 36 a MIC code pertaining to a trading venue under its supervision. As part of this analysis, it was verified firstly whether the investment firm citing a particular MIC code within its transaction reports is indeed a member of that trading venue (only direct market facing entities should quote the MIC Code of the trading venue in Field 36) and secondly whether the TVTIC reported by the investment firm in question is in line with the TVTIC structure as set up by that specific trading venue operator. Subsequently, ESMA compiled and shared the results with the NCAs. Based on these results, the CSSF requested corrections from 11 Investment Firms.
Back in September 2020, UK's regulator, the FCA, in Market Watch 65 included a reminder regarding the relevancy of TVTIC and the inconsistent dissemination of the TVTICs by venues.
We have identified inconsistent dissemination of TVTICs by trading venues to investment firms. We recommend that trading venues review their procedures for the generation and distribution of TVTICs to ensure they facilitate the consistent reporting of a unique code to be used by both the buying and selling parties.
We have also encountered investment firms failing to report the TVTIC accurately. This includes instances where the field has been left blank, reported with an internal code, or reported with a code that fails to follow any guidelines provided by the respective trading venue. Investment firms should review their processes for reporting to ensure these are accurate.
It may be reasonable to say that the FCA's announcement was no coincidence. In June 2020, ESMA and National Competent Authorities (NCAs) collaborated in performing a data quality control aimed at verifying the correctness of the TVTICs as referenced in the CSSFs statement quoted above. This test was rerun in July 2021 in Europe and it is uncertain if the FCA independently conducted their own rerun of the test as Brexit may have caused a divergence in the agenda of the two regions.
Besides the publicised actions of the CSSF in Luxembourg, there is reason to believe that several other European NCAs took the initiative to request corrections of the TVTIC reporting from Investment Firms in their jurisdiction as well.
To this end, there has been a notable increase in the number of EU firms introducing accuracy checks on the TVTIC ensuring that the reported TVTIC conforms to the structure defined by the corresponding Trading Venue.
As observed by Qomply, EU trading venues responded within the day to questions related to their TVTIC structure with many having formalised documentation on the structure. Therefore, it does appear that the exercise has had a notable impact.
In the UK, the FCA has not yet released any further statements regarding the data quality specifically relating to TVTICs. Although, if ESMA and the FCA initiatives are in-step then perhaps it is simply a matter of time.
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Frequently asked questions
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It is the quality, structure, and validity of the Trading Venue Transaction Identification Code in RTS 22 Field 3. The article says regulators have run specific data-quality exercises to test whether firms populate TVTIC correctly.
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They test whether the firm using a MIC code is actually a member of that trading venue and whether the TVTIC follows the venue's expected structure. The article cites the CSSF's description of the ESMA-led methodology.
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It highlighted inconsistent dissemination of TVTICs by trading venues and inaccurate TVTIC reporting by firms, including blanks, internal codes, and codes that do not follow venue guidance. The article says firms should review their reporting processes in response.
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The article says the CSSF requested corrections from 11 investment firms and suggests other NCAs likely took similar follow-up action. It also says EU firms have since increased TVTIC structure checks.
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They should validate that the reported TVTIC matches the specific structure required by the relevant trading venue and that the correct venue MIC is being used. The article says firms should not rely on acceptance by the regulator as proof that TVTIC quality is correct.
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