Lightening the load

Technology is meant to make life easier. Be it a smart phone, TV or fridge, or even a smart water kettle, they all promise a simpler life. Whether they deliver on that is another matter entirely and the idea that more technology always equals better is debatable, particularly considering that my new bathroom scales tweet my weight every time I step on them. Like the ongoing trend... Read More

More rules, more problems?

Fixed income, commodity and currency (FICC) markets are dominated by the big boys, the professional traders and investors. In this proverbial ‘champions league’ of markets, retailers are restricted to cheering from the side-lines. Perhaps because it has been assumed that these highly sophisticated professional traders can fend for themselves, the regulators have not... Read More

True intentions

With the advances made in automated trading in recent years, regulators are having to work pretty hard to catch up with the markets. ESMA currently has two documents out for consultation on the Market Abuse Regulation (MAR) and has announced a public hearing on October 8th. In parallel, last week saw the publication of the CME’s Rule 575 on disruptive trading. The implications... Read More

Do not pass go, do not collect £200

It’s full steam ahead for the review of the Market Abuse Directive. At the end of 2013 the European Parliament and the EU member states reached a final agreement on MAD II that will cover offences such as insider dealing, market manipulation and unlawful disclosure of information. For the first time criminal sanctions will apply to serious financial market offences at an EU... Read More

Smoke-free markets

In recent months regulators have increased their focus on detecting and reporting possible incidents of market abuse. In Europe trading firms are expected to check for potential offences and report their suspicions to the regulator. As part of the MAD Review, the current list of indicators for market abuse will be promoted from a Level 3 document to the new Level 1 regulation text,... Read More

Keeping to the letter of the law

Earlier this week BaFin, the German regulator, held a workshop on the German HFT Act. Global market participants gathered in Frankfurt to discuss and better understand the implications of the soon to be passed law. Questions around the definition of HFT, registration as an HFT firm when operating from abroad and the identification of algo orders were on everyone’s list. Fortunately... Read More

MAD as a March hare

The reviews of the Market Abuse Directive (MAD II) and proposed EU Market Abuse Regulation (MAR) continue to run their course through the European trilogue process, with final Level 1 agreement expected to keep pace with the MiFID review spanning out into the second half of 2013. MAD II and MAR will bring increased obligations on firms, including criminal sanctions, in the event... Read More

Bless me, Father, for I have changed my algo

Managing algorithmic trading will become more difficult in the future. Regulators have already suggested in recent drafts of MiFID II and the German HFT Act that algos need to be registered/earmarked and their functionality reported to the competent authority if requested. The European Parliament (EP) takes the requirement a step further in its draft in Article 10a in MAR. Here,... Read More

The three (MAD) wise men

I find it rather appropriate this season that the three European bodies – the Commission, the Council and the Parliament (the latter with rapporteur Arlene McCarthy’s version) – are each bearing us a gift. Instead of the traditional gold, frankincense and myrrh, each is bringing its own take on the Market Abuse Directive. These slightly different texts will be... Read More

Germany’s “Best of …” HFT law

A Europe-wide consolidated regulatory framework can have many advantages for the financial industry. Laws such as MiFID II, MAD II and EMIR create a level playing field that simplifies competition on a pan-European scale. However, in the last couple of months a number of national legislations have been enacted that make the playing field a bit more uneven, again. There are, for... Read More

ESMA Guidelines – turning change into opportunity

Back in December last year you may recall that ESMA issued guidelines on systems and controls in an automated trading environment. The headlines from those guidelines caused a steady ripple of activity across the industry, in the first few months of 2012, as firms reviewed their processes and procedures to ensure compliance by the 1st May deadline or worked to have a plan in place... Read More

NO ENTRY into the Houses of Parliament in a suit of armour, and the MAD directives

While you may think that the title of this blog entry is obviously silly, it serves as a good example of the difference between sensible rules and bad rules. Think about it – can you work out the bad one? “NO ENTRY into the Houses of Parliament in a suit of armour” may sound ridiculous but, if you think about it, it made perfect sense when it was created at a time... Read More

Border politics

There have been a number of articles recently covering exchange and regulator concerns around the effective detection of market abuse in Europe. FESE has recently published a position paper on the review of MAD in which it encourages policy-makers to consider the issue of effective cross-border and cross-venue surveillance. Fragmentation of trading across several venues outside... Read More

The long road ahead

With the arrival of the new year we have updated the MiFID II Roadmap to reflect the latest anticipated timeline for the regulatory changes. The top row of the Roadmap depicts the progress of MiFID II from Public Consultation last December, via draft legislation issued in October 2011, to likely agreement on legislation expected by late 2012. It is proposed that ESMA will develop... Read More

EC publishes MiFID II and MAD consultation papers

In December the EC published two significant consultation papers on the Review of MiFID and the Market Abuse Directive: Reinforcing sanctioning regimes in the financial services sector. In these documents the EC has posed over a hundred questions and invited comments on numerous topics in order to obtain industry feedback. This feedback will provide guidance for the Commission... Read More

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