Putting MiFID II into practice

As firms march headlong towards 2018 the detailed implementation of MiFID II is well and truly underway. Even in the equities camp where MiFID II, remember, is an intended adjustment to existing rules, the practicalities of trade and transaction reporting mechanics are evolving. Whether ESMA ever envisaged such a complex campaign is debatable, but early advocates of splitting MiFID II up into more manageable chunks may not have been far off the mark.... Read More

Sometimes it’s tough being average

Back in March the CME Group postponed the effective date of amendments to Rule 553 (“Average Price System”) until July 2, 2018 to allow sufficient time for affected Exchange Clearing Member Firms and CME Clearing to make the necessary changes to implement the rule. CME Rule 553 permits a clearing member firm to calculate an average price for trades via its own internally developed average pricing system, rather than requiring the use of... Read More

The same, only different?

For MiFID II to work, the industry must have a clear understanding of what constitutes a single instrument. For cash products such as equity or debt this is straightforward, but in derivatives the concept of a single instrument isn’t really appropriate and things quickly get complicated. Looking ahead, it’s feasible that an OTF or SI offers trading in a bilateral cleared instrument which is similar to a centrally cleared instrument traded... Read More

The far reaches of reporting

Trade and transaction reporting rules under MiFID and EMIR can easily be confused, even though they have different requirements, different formats and, most importantly, different scopes. To recap, MiFID trade reporting is a short message to the public, intraday, for the purpose of price discovery; transaction reporting is a long message to the regulator, at the end of the day, for market surveillance purposes. In terms of scope, MiFID II restricts... Read More

MiFID II – a catalyst for innovation

Trading in auctions – in contrast to continuous matching – has long been poised to grow under MiFID II, due to the technicalities in the pre-trade transparency regime and its waivers. With the go-live date edging ever-closer, the regulation has become a catalyst for innovation instead of being merely a cost of doing business. Exchanges are currently rolling out new and pioneering trading services that are not only compliant, but that will... Read More

A division of labour for SIs?

The current debate between ESMA, the European Commission and market participants on the establishment of networks of systematic internalisers (SIs) is unsurprising given the amount of regulatory change and the potential for market innovation. Last week ESMA expanded on what’s behind its thinking on the topic in its most recent Q&A. ESMA’s objections to such networks are aimed squarely at back-to-back transaction agreements with other... Read More

MiFID II marches on

The last day in March represented a significant milestone on the crowded MiFID II timeline, with the remaining regulations and directives now finally published in the EU Official Journal. If you recall last year’s proposals for delaying implementation until January 2018, there were some far from subtle hints that the new deadline assumed the transpositions and relevant technical standards were delivered by mid-2016. Even with the finish line pushed... Read More

Is the regulatory WORM turning?

A week before President Trump’s inauguration the CFTC approved a proposal to amend the record keeping requirements contained in Regulation 1.31. The changes were an interesting precursor to the Trump administration’s call for a review of regulation in the financial services space. One of the significant changes in the proposal is the elimination of the requirement that electronic records be retained in a non-rewritable, non-erasable format,... Read More

No action sometimes better course of action

Implementing pan-European financial regulation is no easy feat. Finding agreement across 28 member states and translation into vastly differently legal systems is a true challenge. It comes as no surprise that those projects are regularly subject to delays. Against that backdrop, it is most welcome that ESMA is again requesting the power to issue a no-action letter like their international peers (think CFTC). This instrument would allow them to not... Read More

Not all tails wag the dog

Modern atomic clocks tick along much more consistently than the earth manages to rotate around its own axis, which varies due to climatic and geological events. Thus, every so often the global masters of time insert a leap-second in order to align atomic clocks and earth rotation. Unlike changes in winter/summer-time, humans don’t really notice it. Even most software applications don’t care about it. However, trading platforms do care,... Read More

Two for one

If nothing else, we know the new regime in the US likes a good punchy sound bite. As many of us predicted, President Trump and his team have their sights firmly set on loosening the burden of Dodd-Frank and other regulatory sets that they feel make for a hostile business climate. The tagline of Trump’s executive order for regulatory reform is “two for one” – for every new regulation issued, two must be identified for elimination.... Read More

Let’s agree to disagree

With hindsight, last year’s discussion about the differences in defining direct electronic access (DEA) under MiFID II and RegAT may have been somewhat premature. Firstly, with the change in both the US administration and the CFTC leadership it is now uncertain how RegAT will be progressed. Secondly, over the last few months it’s become clear that we can’t even agree within the EU what DEA means. The European debate largely revolves... Read More

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