A MiFID Compliant Trading Platform
Due to new regulatory developments by ESMA, certain services in relation to financial instruments can now only be made available on an MTF. Hence, the vast majority of existing electronic OTC trading platforms in the EU will have to reconfigure themselves to become MTFs.
The migration is a consequence of new regulatory developments. ESMA has changed its administrative practice on how ESMA defines a multilateral trading facility (“MTF”) in its opinion on the trading venue perimeter published in February 2023. BaFin follows this new opinion. Within this opinion, ESMA has broadened its definition of what constitutes an MTF. As a consequence, the new administrative published requires that certain services in relation to financial instruments must no longer be offered via TEX 360T OTC but can now only be made available on an MTF.
360T already operates an MTF, the 360T AG MTF. We are thus able to migrate the services affected by this change of administrative practice from the TEX 360T OTC platform to the 360T AG MTF.
360T AG MTF Migration – FAQ
This FAQ is intended to help answer questions regarding our planned MTF migration to comply with the regulatory requirements of the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”) and the European Securities and Markets Authority (“ESMA”).
Why are we contacting you?
We are contacting you due to a regulatory change resulting in a planned migration of clients and certain products from the TEX 360T OTC platform to the 360T AG MTF.
Why is a migration of products and clients to the 360T AG MTF taking place?
The migration is a result of recent regulatory developments. In February 2023, ESMA issued an opinion paper which changed its administrative practice and broadened the definition of what constitutes a Multilateral Trading Facility (“MTF”) on the trading venue (“TV”) perimeter. BaFin follows this new opinion.
ESMA – Opinion on TV perimeter
BaFin – Guidance Notice on MTF
As a consequence of these changes, the vast majority of existing electronic OTC trading platforms in Europe will have to reconfigure themselves to become MTFs.
But because 360T already operates an MTF we are able to instead migrate the services affected by this change from the TEX 360T OTC platform to the 360T AG MTF one.
Is this affecting other venues as well?
Yes, this is impacting all venues based in the European Economic Area (“EEA”) that are within scope of the new administrative guidance on what constitutes an MTF. It does not affect non-EEA venues.
What instruments are affected? Will I still be able to trade OTC?
Yes, certain financial instruments are not affected by the changes and can continue to be traded over the counter (“OTC”) via TEX 360T OTC. These include:
- foreign exchange spot transactions;
- money market transactions (loans/deposits).
Financial instruments (as defined in Annex I Section C MiFID II1) that will no longer be available for OTC trading and therefore must be migrated from TEX 360T OTC to the 360T AG MTF platform include, inter alia, the following derivatives products:
- Forwards;
- Swaps;
- Options;
- non-deliverable Forwards and
- non-deliverable Swaps.
However, for the interim period, i.e., until the migration to 360T AG MTF has been completed, these financial instruments can continue to be traded via the current TEX 360T OTC offering.
1 Markets in Financial Instruments Directive (“MiFID II”) – Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.
I like the current services. Will they change?
No, the scope of the services and general trading functionality you enjoy today will not change. Once you become an MTF participant, you can continue to use your existing accounts to access 360T’s trading applications, even for certain products that will only be tradeable on MTF.
You can also continue to use your existing 360T APIs (if existent). As an increased number of fields are relevant for MTF trading, you will have to assure that your APIs are adjusted accordingly.
Does the migration impact your financial service licence requirements?
Having consulted with a highly reputable law firm on this issue, we have concluded that generally there will be no changes to the license requirements for the large majority of our clients when they migrate to trading on 360T AG MTF.
However, we cannot determine if this is the case on behalf of each individual 360T TEX OTC user and therefore you will be required to ensure that your individual circumstances do not require license changes.
How will the migration to 360T AG MTF take place?
Your Relationship Manager and Client Advisory Services (CAS) teams will be closely supporting you throughout the migration process to help ensure that it is seamless, and that trading activity remains unaffected.
What are the formal requirements to gain access
- Appendix B – Multilateral Trading Facility (MTF) (the “MTF Access Agreement”) needs to be signed as an amendment to the existing contractual framework.
- A specific MTF Onboarding Sheet needs to be completed.
With the MTF Onboarding Sheet the following data must be submitted:
- mandatory nomination of a dedicated MTF Administrator
- for API Users – nomination of technical integration point of contact
- Legal Entity Identifier(s) (LEI) of
- the contractual entity and
- TAS/TOB Entities (if existence)
- Regulatory status (if applicable) for reporting purposes.
Once the MTF Access Agreement has been signed and the MTF Onboarding Sheet has been submitted, your Bridge Admin User will be contacted by our CAS teams and granted access to a configuration tool to activate traders for 360T AG MTF by entering their Personally identifiable information (“PII”). Our Projects team will contact your technical integration point of contact to discuss necessary API Integration adjustments (if necessary).
What is a LEI?
A Legal Entity Identifier (LEI) is a unique 20-digit code alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). It provides key reference data that allows for the identification of legal entities participating in financial transactions – including derivatives (swaps) transactions.
The oversight and management of LEI’s is now being undertaken by the Global Legal Entity Identifier Foundation (GLEIF) who, over the past number of years, have effectively been creating an LEI global directory. This directory is publicly available.
Do you need a LEI?
Yes, you do! It is imperative that all counterparties to derivatives transactions in the European Union have a LEI for reporting to trade repositories under European Market Infrastructure Regulation (EMIR). Likewise, the LEI can be used for trading and trade reporting purposes in the United States.
Additionally, from 3 January 2018, all clients wanting to access EU trading venues such as the 360T Multilateral Trading Facility (MTF) will be required to have an LEI in order for firms subject to the EU Market in Financial Instruments Directive (MiFID) to be able to comply with their transaction reporting obligations.
Whilst the LEI will clearly assist the regulatory authorities in monitoring and analysing threats to the stability of the financial markets, it can also be utilised by counterparties internally for risk management purposes.
How to get a LEI?
To obtain an LEI you must register with an authorised LEI issuer. They will carry out a validation check on the information provided and, assuming there is a successful validation, issue an LEI. There is a nominal charge for obtaining and LEI. Moreover, it is important to note that you must update your LEI annually.
A list of those entities authorised to issue LEI’s can be found on the website of the Global Legal Entity Identifier Foundation (GLEIF) https://www.gleif.org/en
Why do I have to enter Personally Identifiable Information (PII) of my firm’s users into your system before we can trade on 360T AG MTF?
As an authorised and regulated operator of an MTF by the BaFin, 360 Treasury Systems AG (360T AG) must fulfil “transaction reporting” and “record keeping” obligations in accordance with MiFID II. These reports must include the PII data requested.
Which PII information must 360T AG collect?
Concerning 360T AG’s statutory reporting obligations, 360T AG must collect the “Nationality” and “National Client Identifiers” of 360T AG MTF users, as specified in Annex II of the relevant Regulatory Technical Standards.
How does 360T secure PII data?
Individual confidential data, including Nationality and National Client ID will be recorded and maintained within the 360T data centres in an encrypted format. Data necessary for MiFID Transaction Reporting purposes, including PII, will be processed in accordance with the applicable regulatory guidelines. The responsibility lies with the MTF participant to ensure that all data entered in the configuration tool is valid.
How long will personal data be retained?
Data is retained for only as long as the period required by the General Data Protection Regulation (GDPR) and other legal requirements. The data is deleted after the expiry of the obligation to retain it for audit and regulatory purposes.
What is the lawful basis for processing?
360T relies on the performance of the contract and legal obligation lawful bases (GDPR art 6(1)(b) and (c)) to process the above personal data in connection with service delivery and regulatory compliance. In particular, 360T is required to comply with ESMA reporting requirements to continue providing services
eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32017R0590
eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32017R0580
Which National Client Identifiers should I enter if the system allows me to enter more than one identifier?
The National Client Identifier must be reported in accordance with the priority levels provided in Annex II using the highest priority identifier. For the 360T AG MTF, the 1st priority National Client Identifier must be entered. If the given user is not in possession of this identifier, the second must be entered, etc. You should always aim to provide the 1st priority identifier.
As an admin user, I should not be able to see the PII data of my firm’s users once entered. Does 360T offer a feature to obfuscate the PII after being entered?
Yes, 360T offers a “sensitive mode” feature which can be activated by 360T’s CAS team.
What are the possible values for Trading Capacity? And how are they used?
DEAL: Trading on own account.
MTCH (Matched Principal): a transaction where three conditions must be met:
- The facilitator interposes between buyer and seller to the transaction in such a way that it is never exposed to market risk.
- Both sides are executed simultaneously (timing).
- The transaction is executed at a price where the facilitator makes no profit or loss, other than a previously disclosed commission, fee or charge of the transaction.
AOTC (Any other Trading Capacity): AOTC must be selected if DEAL or MTCH is not applicable.
Do I have to select an Investment Decision Maker?
The Investment Decision Maker should only be entered when the Trading Capacity “Deal” is used. Otherwise, this field can be left blank as PII data would need to be collected from your customers, which is not the intention of the regulators.
What is the purpose of the MTF Access Agreement?
The MTF Access Agreement extends the scope of your existing TEX Access Agreement with 360T AG and grants you access to 360T AG MTF.
The MTF Access Agreement also incorporates a new rulebook applicable specifically to the 360T AG MTF (“MTF Rulebook”), which sets out the rules and procedures for using the platform.
Do you have to enter into the MTF Access Agreement if you are already a member of the 360T AG MTF?
No, clients who are already members of 360T AG MTF are not required to enter into a MTF Access Agreement.
I am from a non-EEA country and/or trade with non-EEA counterparties only. Do I have to migrate to the 360T AG MTF?
Yes, if you are trading in MiFID II financial instruments. Trading in these financial instruments will be migrated to the 360T AG MTF. If you trade in other instruments, i.e., those out of the scope of MiFID II, you can continue to do so via TEX 360T OTC. For an overview of these products please refer to Q4.
Do brokerage fees apply to Takers while facilitating Trades via the MTF?
No. Brokerage fees apply only to Liquidity Providers.
I have further questions. What should I do?
Our customer support team is ready to answer any additional questions that you might have. We have set up a dedicated task force to assist with questions around the migration process.
In case of queries, your Relationship Manager or our CAS teams are always at your disposal.
In addition, your normal point of contact for 360T is also available to support you.
What you need to do
Corporates
Institutional
Banks
Overview
The Background
Both 360 Treasury Systems AG’s (360T AG) chief EU regulator, the European Securities and Markets Authority (ESMA), and national regulator, the Federal Financial Supervisory Authority (BaFin), recently released clarification regarding their administrative practice with regards to trading venue perimeters.
This clarification introduced changes which mean that in the future the vast majority of current electronic OTC trading platforms, including 360T AG, will only be able to support certain trading activities via a multilateral trading facility (MTF).
360T's Response
In response, 360T AG will offer trading of the financial instruments impacted by the changes, such as FX derivatives – FX forwards, FX swaps*, FX options, FX non-deliverable forwards (NDFs) and non-deliverable swaps* (NDSs) – via its MTF.
By migrating this trading activity to the 360T AG MTF, which has been in operation since 2018, we will enable 360T users to comply with the increasing regulatory and market conduct requirements in the FX industry, while also offering greater transparency and enhanced control at every stage of the trading lifecycle.
FX spot transactions, which are exempt from the changes, can still be traded via 360T AG’s OTC platform.
MTF Fees
Taker side – no brokerage charged
Maker side – Schedule of Fees (valid from 9 January 2024) – 360T AG (EU) MTF (PDF)
Pre-Trade
Waiver
Foreign Exchange (FX) is currently generically classified as being a non-liquid financial instrument. Consequently, in accordance with the provisions of the Market in Financial Instruments Regulation (MiFIR) and accompanying Regulatory Technical Standards (RTS), 360T MTF applied for and received on 21 December 2017 a waiver from the requirement to provide pre-trade transparency details. Given that 360T MTF is based on a Request for Quote trading model, it is believed that providing such transparency would not be in the interests of MTF market participants or the wider FX market.
360T will of course continue to evaluate the benefit of maintaining the pre-trade transparency waiver and to ensure that its MTF operations remain fully compliant with both the obligations and the spirit of MiFID II.
Publication times
In accordance with both the provisions of MiFID and a general ruling issued by 360T home state regulatory authority, the German federal Financial Supervisory Authority (BaFin), on the 3rd of July 2023 and applicable until further notice, 360T will provide the following post trade transparency information: