Chi-X, ICMA Partner for Regulatory Reporting

As part of the service, Chi-X collects trading data on a real-time basis and enriches it with additional fields required for transaction reporting, such as client identifiers when a trading firm is acting on an agency basis. That data is then converted into an end-of-day static file for each client, and sent to Trax2 for distribution to the UK regulator, the Financial Services Authority.

Although trading venues are not required to support transaction reporting under MiFID—responsibility for which ultimately lies with trading firms—Chi-X sought to offer the service to ease its clients' regulatory burden and facilitate trading on its platform. However, the service will not be used to generate profits for the platform.

"We don't want to make money out of this service. We just want to facilitate onward transaction reporting, effectively on a cost-recovery basis. There's a small fee per firm of £210 per month to facilitate this on an all-you-can-eat basis," says Chi-X director Hirander Misra.

ICMA, already well established in the transaction reporting space, offers a competitive sliding scale tariff that would allow clients to capitalize on volume discounts by combining flows, Misra says

"The tariffs that they have in sliding scale… is very low," Misra says. "A lot of clients already use Trax and will use Trax2… not only in the bond market but equities as well, and they get volume discounts by combining that flow with the market flow on Chi-X," he says

ICMA's Trax2 system was also recently certified as a MiFID-compliant approved reporting mechanism (ARM) along with Credit Suisse Securities' Dare system, CrestCo's Crest system, the FSA's TRS system, the London Stock Exchange's ERS system and Omgeo's OTR system.