Read the interview and learn about:
- MiFID II Transaction Reporting Requirements
- Meeting the compliance challenges of MiFID II
- Power of the cloud and partnerships
Nick Sylvester, Global Partner Director, Financial Risk Division, Thomson Reuters
According to a recent Financial Times article, “MiFID II, the vast set of rules governing Europe’s financial system, is an ugly word in the U.S. investment community” because it potentially drastically alters the way traders, brokers, analysts, and fund managers interact. Bankers in Europe and other regions affected by the regulations agree and worry about unintended consequences beyond compliance burdens. In short, it is widely agreed that MiFID II represents one of the most fundamental and far-reaching regulations the industry is facing. This article addresses the options for tackling the challenges head on.
Demand for better oversight of the financial markets means the scope of transaction reporting has increased, both for the instruments that are covered and the amount of information required in each report. It will now extend to any financial instrument that has traded or been admitted to trading on a trading platform (and not just the regulated markets as dictated by MiFID I), as well as those that have had a request for admission to trade, and those for which an underlying instrument or basket/index of instruments has been traded. Institutions that deal with fixed income, foreign exchange, and currency and commodity derivatives must now meet the same standards as buy-side equities traders.
As a result, banks are looking for technology solutions that will allow them to capture and analyze transaction-related data throughout the entire lifecycle of a trade. These solutions will provide workflows for institutions to have access to an extended set of data to determine what reporting requirements are needed across asset classes for MiFID II compliance.
Meeting new compliance tasks head on
Among the challenges that will affect financial institutions’ compliance with MiFID II are:
- managing requests for quotes and responses,
- balancing the size and timeliness of execution,
- choosing participants in the process, and
- successfully gauging the risk of a trade’s market impact.
Sales desks and traders must have access to the broadest and most up-to-date real-time market data, available on desktops and within their firm’s streamed-pricing tools.
Broker-dealers who only infrequently execute bond trades and managers seeking to ascertain whether dealers are quoting the best price must now add MiFID compliance to their workflow. Solving for this requires new technologies and the ability to scale them according to a firm’s individual needs, and it has created a large, untapped opportunity in over-the-counter markets.