Articles tagged by Mifid Ii
While I am generally unconcerned about the FX industry's preparedness for MiFID II - it has a long and proud history of hitting deadlines - I am bothered by a potential psychological impact from the legislation. Too many are looking at TCA in the light of MiFID II and thinking "box-ticking", to the extent that TCA reports are left unread and even un-opened. The data is good, and it should be used to make execution better, not to fulfil a compliance exercise.
Liquidnet has published the high level findings of a recent survey of asset management firms that probed their views of best execution requirements under MiFID II.
The study finds that just 6% of those surveyed believed they are currently ready to meet best execution requirements, and 61% of respondents recognised their need to provide more granular detail to their policies, with a third planning to make changes to trading workflow. In addition, over a quarter are specifically investing in technology to ensure a more systematic approach to best execution.
Integral has rolled out specific solutions for MiFID II compliance. The firms says it will deliver its entire platform with services necessary to meet MiFID II requirements including assistance with pre-trade and post-trade transparency, surveillance, TCA, reporting, and record keeping. With many firms now facing a Systematic Internaliser (SI) regime, Integral says they must do “significant” work to implement new obligations around their dealing practices and prove transparent and compliant trading. The firm says it will support SI customers and alleviate much of the regulatory burden of pre and post-trade transparency, transaction reporting, best execution, and record keeping.
FlexTrade has announced the integration of Dataminr’s global macro news feed into the FlexTrader EMS.
Within the trader's Dataminr account, customised watchlists can be created ensuring that only the most relevant and directly impactful breaking news is delivered. For example, the firm says, within a financial markets search, traders can choose to select alerts based on sub-categories including foreign exchange and fixed income. Watchlists may be created based on assorted criteria, which can include company name, topics (finance, global awareness, general news etc.) and/or industry sectors (banking and finance, insurance, media etc.) to name a few, according to the firm.
Global network provider BSO has optimised the speed across its London to Tokyo route.
In a release issued today BSO claims that by consistently enhancing its circuit BSO can help clients can quickly adjust to the continuing electronification of FX markets less than five months out from MiFID II.
“In the fast-paced world of FX, time is literally money. This is why having the lowest possible latency across our leading London-Tokyo route is a must for the international trading community. Every millisecond counts, and with MiFID II just around the corner, the voice to computer-based trading shift is gathering increasing momentum,” says Fraser Bell, chief revenue officer at BSO.
Cürex Group has unveiled plans to introduce additional time stamp functionality to its pre-trade analytics platform.
The new capability will allow Cürex’s customers to prove their compliance with the upcoming MiFID II’s mandated pre-trade market check through a time stamp provision, which provides recorded proof that the market check took place before an FX trade was executed.
The time stamp will be included both on each client’s FX trade confirmation and in end-of-day trading reports that Cürex provides to its customers.
The role of data in FX markets is becoming even more important, from the numbers that drive a pricing engine, through the analysis that underpins the risk management procedures, to the data that provides post-trade execution analysis, it is now, more than ever, at the heart of the FX industry.
The Q4 issue of Profit & Loss will include the latest of our in-depth special reports, this quarter looking at how data is changing the FX industry. As part of this, we are conducting our quarterly survey, which asks for your view on a variety of data-related topics from TCA to data mining.
Plenty of things surprise me in life; West Ham, the New York Giants and the Montreal Canadiens actually winning; Cable going up; the people we elect as our leaders – the list is endless.
One line on the list continues to puzzle and intrigue me in equal measure – why have we still to make significant progress on automating the trading of FX swaps? Am I the only one who sees the time for CLOB in FX swaps as being now?
Specialist FPGA-enabled high-performance networking platform provider Metamako, and Velocimetrics, a provider of business flow tracking and performance analytics, have announced a collaboration to deliver analytics and time stamping “beyond what is required by MiFID II”.
The firms say Metamako’s low-latency, FPGA-enabled network devices will deliver lossless data capture and nanosecond-precision time stamping, while Velocimetrics’ VMX monitoring software will consume and analyse the ‘raw’ data to enable financial institutions to measure, monitor and gain deep insight into their business/trade flows with unprecedented speed, accuracy and flexibility.
The subject of how data is used to conduct Transaction Cost Analysis (TCA) formed part of a lively debate at Profit & Loss Forex Network Chicago. Galen Stops moderated.
Paul Aston, the CEO of Tixall Global Advisors, proposed the motion that “TCA Is Just a Morality Carwash”, effectively arguing that many buy side firms are simply handing over their fiduciary duty to ensure best execution for their investors to their sell side counterparts, while using TCA to justify the trading decisions that they make as a result.
Opposing the motion was Isaac Lieberman, CEO of Aston Capital Management, who formed his argument around the proposition that market participants who are trading risk do so against a set of metrics by which their success is measured and therefore they are conducting TCA to show performance against these metrics.
NEX Regulatory Reporting has announced its intention to apply to become a trade repository for the Securities Financing Transactions Regulation (SFTR) and launch a dedicated reporting solution, pending the issuance of the final technical standards from ESMA.
The firm, which is part of NEX Group, says it will in time add the SFTR trade repository and solution to its Global Reporting Hub to provide clients with an end-to-end solution for the securities lending and repo markets. The SFTR trade repository will be built and hosted in the cloud.
Thomson Reuters has enhanced its reference-data capabilities, available on its integrated data and analytics delivery platform, DataScope.
The firms says the platform will deliver key regulatory content and will link crucial information, such as reference data, corporate actions, entity data, end-of-day data and intraday data in an insightful and actionable way for customers to meet MiFID II requirements. In order to be compliant with MiFID II requirements investment professionals will be required to have suitable risk models that safeguard against risk exposure.
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.
Market access technology provider Vela has announced the launch of its Systematic Internaliser (SI) Data Hub, part of its MiFID II solution suite. The firm has also confirmed the addition of Sun Trading as part of its roll-out of new Systematic Internaliser venues.
The SI Data Hub provides clients with access to multiple SI liquidity price feeds through a single normalised API, helping to address MiFID II concerns regarding best execution and liquidity fragmentation when it takes effect on 3 January 2018.
Thomson Reuters has released into production, system enhancements to its Multilateral Trading Facility (MTF) to support FX derivatives trading in compliance with MiFID II regulations.
Thomson Reuters FXall and Forwards Matching users can now access liquidity on the MTF, which meets multiple MiFID II requirements relating to execution workflow, trading controls, post-trade transparency and reporting. MiFID II takes effect on January 3, 2018.
“We are extremely pleased to have reached the milestone of releasing the system enhancements into production to facilitate MiFID II compliance. In parallel, Thomson Reuters continues to work very closely with our customers and regulators to ensure a smooth transition into the new regulatory environment,” says Neill Penney, global head of trading. “As the implementation date approaches, we remain committed to continuing our approach of being a valued partner and advisor to our customers.”
The Wholesale Markets Brokers’ Association has announced that with immediate effect it will change its name to the European Venues and Intermediaries Association.
The Association says the new title reflects changes to the role of inter-dealer brokers following the implementation of Markets in Financial Instruments Directive (MiFID) II which comes into effect on 3 January 2018.The role of the newly-re-branded EVIA will be, it says, to strive to ensure fair and effective markets across its membership through the common rulebook of MiFID II.
The European Securities and Markets Authority (ESMA) has announced a delay gto the implementation of a key element of the impending MiFID II regulation, which is due to go into effect on January 3, 2018.
The Authority says the delay is, “To support the smooth implementation of Legal Entity Identifiers (LEI) requirements under the Markets in Financial Instruments Regulation (MiFIR).”
MiFIR obliges EU investment firms to identify their clients that are legal persons with LEIs for the purpose of MiFID II transaction reporting.
Integral Development Corp has received approval from the UK’s Financial Conduct Authority (FCA) to operate a multilateral trading facility.
The firm says the MTF, the technology for which is based upon its Open Currency Exchange (OCX) platform, includes all the features and services necessary for clients to conduct MiFID II compliant trading.
It adds the MTF will provide enhanced surveillance practices, monitoring procedures, and execution analysis for transparent and compliant trading of FX forwards, swaps, and NDFs.
Integral says it will deliver its entire platform with services necessary to meet MiFID II requirements including assistance with pre-trade and post-trade transparency, surveillance, TCA, reporting, and record keeping.
Thomson Reuters (TR) has made a number of service updates following the January 3 go-live date for Mifid II.
It is now offering Mifid II compliant data to clients from 57 global exchanges and eight new Mifid II trading and reporting venues, including Tradeweb's Approved Publication Arrangement (APA) and MTS BondVision's Multilateral Trading Facility (MTF).
TR has also launched its MTF, which offers Mifid II compliant trade reporting, and updated its instrument reference data capabilities to ensure comprehensive coverage of the key financial instruments covered by the regulation.
JP Morgan has released the results of its e-Trading Trends for 2018 survey, which was taken among more than 400 institutional traders – the majority being FX – in October 2017.
The survey indicates strong growth in the use of mobile trading apps as well as renewed optimism that client uptake of algorithmic execution strategies will emerge in 2018.
The headline finding from the survey is that 61% of respondents say they are likely to use a mobile app for FX trading, more than double the 31% who said the same in the 2017 survey.
FX Connect is partnering with trade technology software provider, BestX, in order to offer transaction cost analysis (TCA) solutions globally.
“We’re taking what we consider to be an extremely impressive set of TCA functionality that enables out-of-the-box integration between the two platforms and offers customers what’s essentially a turn-key integrated solution that supports the TCA required to underpin best execution policy evidencing and execution,” David Newns, head of execution solutions for Global Link, State Street’s suite of e-trading platforms, technology, data and workflow solutions, tells Profit & Loss.
He adds: “Furthermore, the bespoke integration between FXConnect and BestX, which not only includes the sophisticated models which BestX currently offer, but also enhanced data around trade times, speed of execution and certainty of trade settlement makes this a unique offering.”
FlexTrade has announced it has integrated with BestX to provide its FlexTrader EMS clients with access to the latter’s FX trade analytics solution.
With a fully interactive interface, users can use BestX to analyse their FX executions in real-time, delivering transparency to enable better decision making whilst meeting the needs of MiFID II compliance for FX trading, the firms say. Every FX trade made within FlexTrader can be transferred live to BestX where users can analyse their performance in real-time.
Although it required a heavy lift from the financial services industry, the Mifid II implementation deadline came and went with minimum disruption. However, as Galen Stops points out, the real change is still yet to come.
So here’s the good news for the FX industry: the January 3 Markets in Financial Instruments Directive (Mifid) II implementation deadline passed without any significant market disruption at the start of this month.
“January 3rd went relatively smoothly, our members generally reported a largely uneventful launch although the industry is continuing to work through a number of minor issues, which is what you would expect at this point in time,” says James Kemp, managing director, Global FX Division, Global Financial Markets Association (GFMA).
The continued implementation of Mifid II will be generally characterised by lots of hard work in the background and not much immediate action in the foreground, argues Galen Stops.
We all know the metaphor of the swan gliding seemingly serenly through the water, while in fact its feet are paddling away furiously underneath and out of sight.
Well that swan is a pretty accurate representation of what the January 3 go- live date of MiFID II was like for many market participants, by all accounts. A huge amount of work had gone in behind the scenes to make sure that firms were compliant so that, when it arrived, the big day passed largely uneventfully.
The International Swaps and Derivatives Association (ISDA), the European Banking Federation (EBF), International Capital Market Association (ICMA) and the International Securities Lending Association (ISLA) have published a whitepaper on the benefits of post-trade risk reduction services as a crucial risk management tool.
The bodies say that risk reduction services like compression and counterparty rebalancing play an increasingly important role in reducing risks in derivatives markets. These benefits are recognised in the European Union under MIFID II/MIFIR, which exempt post-trade risk reduction administrative transactions from the trading obligation, however, currently no exemption from the clearing obligation in the EU for these transactions.