A new survey by trading technology provider Integral Development Corp finds that FX market participants face a race against the clock to be fully prepared for MiFID II.
In a global poll of 282 market participants last week the firm found that only 18% claimed their FX business was completely set for January 3, while one third saud they were only half ready how the requirements, which include demonstrating best execution to clients and increased reporting, will affect currency trading.
The survey also found, in spite of the argument that MiFID II will inevitably lead to more automated trading, that despite what it calls “the recent drive for greater transparency leading to more computer trading in FX”, over two-thirds of respondents believe voice still has a future.
Less than a quarter feel that MiFID II will be the death of trading currency over the phone, although the survey finds that more than 60% think ease of reporting is the main benefit from trading through an electronic platform such as a multilateral trading facility (MTF).
“The looming January 3 deadline not only has the potential to interrupt the way currency trading operates across Europe, but also to distract firms from growing their businesses,” says Harpal Sandhu, CEO of Integral. “As firms begin gathering regulatory feedback in the New Year, they will look towards a flexible cloud-based solution that enables them to make fast and easy changes to their trading systems and processes.
“While MiFID II will clearly lead to an increase in electronic trading flow, these responses show voice still has an important role to play in FX,” he continues. “Banks are now exploring the use of technology that records all the required MiFID II data for all currency trades – voice or computer, executed or quoted, to deliver a full overview of the forex markets to clients.”