Murky waters run deep

Ana Herrero-WallaceWhy are politicians so obsessed with bringing transparency to the European post-trade regime?

MiFID II is very much focused on fixing all the unintended consequences that followed the implementation of the MiFID directive in 2007. The fact that the original regulation allowed the publication of OTC trading on websites and the fragmentation of trading without the construction of a post-trade consolidated tape resulted in an opaque post-trade picture.

Any new consolidated tape should provide a single place for post-trade data on which to base execution performance. It has been a mystery for some buy-side traders as to how much volume is actually traded in a particular stock. Many believe that much of the trade reporting is double-counted, especially in the OTC space. So, on that basis, how can they analyse the veracity and performance of their transactions when they can’t even compare their trading to the market using Transaction Cost Analysis (TCA)? Post-trade data inefficiencies have hindered those buy-side firms in their ability to undertake regular monitoring of best execution.

I welcome some of the new proposals that have come out of Brussels aiming to bring post-trade transparency, starting with the creation of a consolidated tape that should be able to show the executed prices and volumes for a particular stock in a single day. Also, I agree with the introduction of the APA regime which will clean and validate post-trade data and set the standards for OTC reports. These are positive proposals that encourage better flagging of OTC post-trade executions.

If these proposals go through some of the murky waters will become clearer, enabling an investment firm to see what lies beneath and to perform verifiable TCA on what really went on while their order was being executed. Bravo!

How do you rate this content?

View Results

Loading ... Loading ...
Leave A Comment

Copyright © 2017 Fidessa group plc. All rights reserved.

The information contained within this website is provided for informational purposes only. Fidessa will use reasonable care to ensure that information is accurate at the time it is made available, and for the duration that it remains on the site. The information may be changed by Fidessa at any time without notice. We also reserve the right to close the website at any time. No representation or warranty, expressed or implied, is given on behalf of Fidessa or any of its respective directors, employees, agents, or advisers as to the accuracy or completeness of the information or opinions contained herein or its suitability for any purpose and, save in the case of fraud, all liability for direct, indirect, special, consequential or other loss or damages of whatever kind that may arise from use of the website is hereby excluded to the fullest extent permitted by law. Any decisions you make based on the information in this website are your sole responsibility and information on the website should not be relied upon in connection with any investment decision.

The copyright of this website belongs to Fidessa. All other intellectual property rights are reserved.

Reproduction or redistribution of this information is prohibited except with written permission from Fidessa.