LEI – how many expert groups does it take to identify an entity?

With the latest progress note from the Financial Stability Board (FSB) on the Global Legal Entity Identifier (LEI) Initiative published last week, it’s a good time to look at the basics. In June 2012, with the backing of the G20, the FSB was tasked with driving forward the LEI initiative to create a universal numbering system to uniquely identify parties to financial transactions. The initiative promises to deliver a global registry of unique identification numbers –... Read More

The voice of reason

Electronic trading has fundamentally revolutionised financial markets in the last few years. But events such as the flash crash and the recent trading malfunction at Knight Capital have given market participants and regulators cause to worry that Pandora’s Box has been opened. Much of the concern raised by politicians and regulators is down to uncertainty; there is little knowledge available that describes how automated trading systems are operated within brokerage firms.... Read More

Brussels’ rules of etiquette

The on-going flood of new regulations and directives coming out of Brussels continues. With all its consultation papers, drafts, technical or implementing standards, recitals and articles, it is hard to keep your head above the waterline. Here are a few pointers to help you structure that paper flood into some more manageable channels. European laws and legislations are formally referred to as acts. An act is a collective term for a regulation or a directive (it also includes... Read More

And the winner is … a compromise!

Whoever said the political processes to formulate MiFID II and MiFIR were complicated and boring? Look at it from the right angle and it can be every bit as exciting as the knockout rounds of a FIFA World Cup tournament. In the World Cup football teams compete against each other and only the winner progresses. The last team remaining in the competition takes home the trophy. Politics, however, is a competition of ideas and proposals. There are multiple versions of MiFID II and... Read More

Sensible timeframes please!

The final text of EMIR (European Market Infrastructure Regulation) entered into force on 16th August and the next milestone for ESMA, to complete the Level 2 text by the end of September, is fast approaching. ESMA’s consultation on the draft technical standards received over 130 responses before the 5th August deadline. Whilst there is general support for the key aims of EMIR, in respect of risk reduction through central clearing and increased regulatory transparency through... Read More

The consolidated tape’s blind spot

In the US the consolidated tape aggregates trade data across multiple exchanges. However, the consolidated tape does not include trades for less than 100 shares of stock. Looking at this today, it is surprising that such an exception was implemented. In the past such small trades were regarded as retail trades with very little information content, thus they were perhaps not considered worth collecting. But with the introduction and continued growth of algorithmic trading, the... Read More

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