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

Don’t buy it, if it’s not worth it!

Back in May, BATS Chi-X Europe announced that it will start charging for market data from 1st October. Last week Turquoise followed its competitor, announcing that it too will introduce fees for market data, effective from 1st November. While the former’s move could have been explained by its strong market share, this is not the case for the latter. BATS Chi-X had a market... Read More

New month, new tax

Yesterday, 1st August (already!), the new French Financial Transaction Tax (FTT) came into effect. With the fine print of the new tax only emerging over the previous few days, we’ve now added the French FTT to our ‘At a glance‘ page to provide you with an overview. The tax, which applies to the purchase of over 100 French stocks with a company market value of more... Read More

School’s out!

OK, school’s out and the head’s advice was “…don’t do anything silly, and come back refreshed and ready for the new challenges of next year.” The European Parliament is also on its summer break and the next ECON Committee vote on MiFID II is scheduled for 26th September, with a plenary vote on the calendar for 19th  November.  There remains, however, a whole lot of... Read More

Lost in translation

Yesterday the CNMV (the Spanish regulator) and CONSOB (the Italian regulator) banned any short selling (naked or covered) in their respective markets. It is becoming more and more difficult to believe that these bans are imposed as a measure of good market regulation and not due to unrelated political considerations. On that point, a new study by Ian W. Marsh and Richard Payne analysed... Read More

We learn from history that we do not learn from history

Many people might have missed it, but between 1905 and 1981 the New York state imposed a Security Transfer Tax. The tax was based on the par value (aka stated value, or face value) of stocks traded, transferred or delivered in New York State. It was not implemented as a financial stability measure, but as a revenue generator to fund the state deficit. Following the 1932 and 1966... Read More

The horse hasn’t bolted, yet!

The Flash Crash catapulted circuit breakers into the public spotlight and showed how they (or rather the lack of them) can impact financial markets. Since then, in Europe at least, discussions have been relatively quiet. European markets are perhaps less prone than others to such massive price swings for two reasons. Firstly, Europe does not have the trade-through rule and, secondly,... Read More

Extraterritoriality, equivalence, reciprocity? It’s all Greek to me!

Following the latest MEP discussions in Brussels can be quiet challenging at times. Not only was this particular session interrupted by protesters, but MEPs kept throwing in technical terms in regard to third country regulation that not everyone might be familiar with. So here is a quick guide to cut through all the mist. Today, the access of third country firms to the EU markets... Read More

Sacrificial lambs and unintended consequences

Andy the Trader: I heard tick size is a topic in MiFID II, again. Haven’t we been through this already? Yes, you’re right. FESE and LIBA brokered an agreement between most European equity trading venues and sell-side firms in 2009. But the topic appears again in the latest proposed amendments for MIFID II (Article 51) and on ESMA’s work program. Andy the Trader: Once again,... Read More

European Regulation – A Tale in Four Acts

According to the Chinese calendar 2012 is the Year of the Dragon. But if you ask anyone in financial markets, 2012 is the year of the regulator. The latest white paper by Fidessa aims to help market participants negotiate the increasingly complex web of regulation that will result from the introduction of initiatives such as MiFID II, MAD II and EMIR. It examines some of the unintended... Read More

Obituary: Do-good Chi-X Europe

Young start-ups with highly disruptive business models usually have the luxury of having idealistic mission statements. Just remember Apple Inc. and the promise to “think different” or Google Inc. and their slogan “Don’t be evil”. In my view, Chi-X Europe was directly in that category when, many years ago, Peter Randall was screaming from the rooftops... 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

Much ado about nothing

ESMA is currently considering providing guidelines on fee structures. This sounds to me like the regulators are reviewing the maker-taker pricing model. MTFs introduced maker-taker pricing to Europe about four years ago, whereby liquidity providers receive a rebate for executing their passive orders, while liquidity takers will pay a fee for executing aggressive orders. Usually,... 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

Busy like a bee

ESMA just published an updated version of their work program for 2012. The regulator plans to produce no less than 77 technical standards, technical advice and guidelines and recommendations this year! The newly passed law on short selling will require 18 documents, while EMIR holds the record with 41 expected publications. Enjoy making sense of all that regulation. Luckily, in... Read More

Good intentions – bad results

Lobbying  in Brussels can be such a dirty business. Hidden agendas and vested interests are dominating the daily business. Thus, I was very pleased when Finance Watch (a non-industry lobby group, the lobbying arm of Occupy Wall Street, if you will) engaged in their mission to “making finance serve society”. However, the dream of a better world was crushed last week... Read More

Liquidity and the regulation of markets

Last week’s TradeTech in London included a talk about liquidity by David Lawton, the FSA’s Acting Director, Markets, during which he discussed all the hot potatoes that MiFID II has to offer.  For a change, this was not another piece of 500 millisecond nonsense but included some sensible and well considered arguments. Here are the highlights of his key points: •  ... Read More

Deciphering the new map

Two key themes – liquidity and risk – always rise to the surface of any discussion around the implementation of regulation for OTC derivatives trading in Europe and North America. A couple of recent articles in The Economist neatly outline both sides of the argument by discussing risk, potentially increasing transaction volumes and strategic business opportunities arising... Read More

Block Trade: Endangered species or old habit?

Currently, MiFID favours block trades by granting them privileges that regular sized trades do not receive. A block trade between two institutional investors is treated rather like a Sumatran elephant that is way up on the red list of threatened species. Regulators protect block trades by allowing for pre-trade transparency waiver and delayed post-trade reporting. At the other... Read More

Regulation, regulation, regulation!

As market participants are still reeling from the attack on HFT and technological innovation in the latest draft amendments to MiFID II, let’s take a look at the rapporteur Markus Ferber’s draft changes to the proposed MiFIR EU regulation. The biggest change is that the OTF category, previously proposed in an attempt to regulate OTC trading on broker crossing systems, now looks... Read More

Treat the cause, not the symptom

The current MiFID II draft proposes a minimum duration for any order of 500 milliseconds (see Should have gone to Specsavers!). Politicians seem to believe that installing a minimum duration for orders will halt the HFT ‘madness’ and bring some much needed calm to the market. Unfortunately, it looks like they are going to treat only the symptoms and not the cause. Trading... Read More

Self-test – am I a HFT strategy?

The European Parliament has issued its rapporteur report for MiFID II, as discussed in The Rapporteur’s Story and Should have gone to Specsavers! The current proposal includes a definition of high-frequency trading strategy. Furthermore, it proposes to regulate HFTs more strictly. That scared me a little bit. After all, I do some trading in my spare time so I followed the definition... Read More

Should have gone to Specsavers!

On first reading of the draft report from the rapporteur on MiFID II it is unclear from the wording if the ban on direct electronic access is only in the context of high-frequency trading. Surely this must be the case, otherwise we may as well all pack up now. Additional draft amendments to the MiFID text worthy of note are: •    the timeline is crystallising with the final... Read More

The Rapporteur’s Story

Here’s a taster of what could be coming in the Q1 report from the rapporteur for MiFID II – EU lawmaker wants draft securities law beefed up. Looks like, as we expected, HFT could take the hardest hit and OTFs may be limited to non-equities. Thanks to Tor for spotting this article.  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

A butterfly effect in the making

In a recent speech, Andrew Haldane (Executive Director, Bank of England) makes a strong and convincing case that the proposed global Legal Entity Identifier (LEI) and the Unique Product Identifier (UPI) will have the largest impact on the financial industry in the current regulatory overhaul. The LEI and UPI are introduced in a recent CPSS IOSCO paper on “OTC derivatives data... Read More

Are we still fighting for a truly integrated Pan-European market?

The harmonisation and consolidation of European markets was truly a hugely successful project for European financial markets within the last few years. We enjoyed massive innovation, growth and new opportunities. Think about it, without MiFID, Chi-X, BATS, European Multilateral Clearing Facility (EMCF), and the Fragulator we would still have to pay ridiculous high exchange fees... Read More

Another kind of movie night

Let’s face it, a meeting of the Committee on Economic and Monetary Affairs (European Parliament) regarding MIFID II and EMIR is hardly a topic suitable for a movie night. So I wasn’t really that excited to watch their latest discussions on Monday evening in Strasbourg via the internet. However, after seeing the new MiFID movie poster, I was inclined to tune in and watch some... Read More

Make your mind up!

According to The Trade yesterday the European Parliament (EP) is considering forcing broker crossing networks to become systematic internalisers (SIs) or multilateral trading facilities (MTFs) due to fears of excessive fragmentation. The EP may limit the organised trading facility (OTF) category to non-equity instruments only. Since the October 2011 publication of the MiFID II draft... Read More

Down with opacity and shady deals!

Following the MiFID II roadmap a significant milestone was reached in Brussels last week with the final text of EMIR (European Market Infrastructure Regulation) agreed on 9th February. After 2 years of European Parliament debate this will bring to an end “the era of opacity and shady deals”, according to Michel Bernier the EU commissioner! EMIR is one part of the history-making... Read More

Third-country confusion!

Reported last week on FT.com, a coalition of trade associations has commissioned lawyers to study the viability of a mutual recognition regime between the EU and US regulators. This is to clarify ‘third-country’ requirements in EMIR (European Market Infrastructure Regulation – reforms for OTC derivatives) and MiFID II regarding financial services businesses in... Read More

To Ping or not to Ping?

Headline items for investment firms from the ESMA Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities are listed below: •    comply by 1st May 2012, subject to FSA adoption •    guidelines are based on existing MiFID current industry best practice with little need for any change envisaged... 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

European financial transaction tax more likely!

A very broad agreement in favour of a European Union financial transaction tax emerged on last Monday (9th January 2012), at the start of the Economic and Monetary Affairs Committee’s work on the legislative proposal. Spokespersons for the European Parliament’s (EP) various political groups all advocated such a tax, at least throughout the Eurozone, and many were concerned... Read More

ESMA publishes its Final Report on Automated Trading guidelines – effective by 1st May 2012

22nd December 2011 – ESMA published its final report on guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities. In issuing these guidelines, ESMA rolls out a comprehensive regime governing the operation of electronic trading systems by a regulated market, a multilateral trading facility (MTF)... Read More

SEC Large Trader Reporting Rule

Many thanks to Jess Haberman in our New York office for this summary of the SEC Large Trader Reporting rule: In July 2011 US Securities and Exchange (the SEC) Commissioners unanimously approved the Large Trader Reporting rule; the aim is to “… promptly and efficiently identify significant market participants and collect data on their trading activity so that we can reconstruct... Read More

Reshaping the OTC derivatives market

Many thanks to our colleague David Petersons for the following interesting observations: While much remains to be resolved through rule-making, this Capco article discusses the impact of the Dodd-Frank Act on OTC derivatives, outlines the key elements of the Act affecting OTC derivatives trading and provides an update on where the rule-making stands. The predictions about four possible... Read More

MiFID II should be a priority for every financial firm

There were two recurring MiFID II issues discussed at TradeTech Liquidity (24th Nov): the new OTF category does not fit the riskless principal/dual capacity model used by firms facilitating agency client order execution on existing broker crossing systems – business models will all have to change! According to Kay Swinburne the number 1 issue for the Rapporteur, for the... Read More

Are you sitting comfortably?

A few interested parties settled down on Monday afternoon to watch a live broadcast on EPTV from the Committee on Economic and Monetary Affairs (ECON) – the first European Parliament open hearing on ‘MiFID Review: objectives for MiFID/MiFIR 2’. This debate is part of the open decision-making procedure around the MiFID II draft legislation, published in October,... Read More

Plenary Meeting of the MiFID Forum 30th November

The MiFID Forum is made up of industry standards bodies and trade associations (SIIA/FISD, FIX Protocol, ISITC Europe and TWIST) affected by MiFID.  It provides an opportunity for open discussion and debate amongst market practitioners from compliance and operational areas on issues affecting the financial markets. A plenary meeting of the MiFID Forum was held on 30th November... Read More

Seconds away.. round II for MiFID!

As the European Commission and European Parliament start to debate the MiFID II draft legislation published on 20th October, in the form of a Directive and a Regulation, the EP has called for (more) industry feedback. All interested stakeholders are invited to complete a questionnaire with a closing date of 13th January 2012. Speak now or forever hold your peace!  Read More

Europe’s Hotel California

With the proposed new framework of MiFID II due to increase the supervisory powers of the European regulators, it’s been particularly alarming to watch as the EU’s heads of state try to solve the eurozone’s sovereign debt crisis. Greece’s Prime Minister, George Papandreou, threw a real spanner in the works when he announced his intention to hold a referendum... Read More

MiFID II Digest

While the 10 key takeaways from MiFID II may have given Steve indigestion, we are busy tucking in to the smörgåsbord of recently published MiFID II documents and snacking on all the published articles on the subject. From my reading so far, most looks as expected from the previous version that was leaked in August, with the following worthy of note: Organised Trading Facilities (OTFs)... Read More

Toto, I have a feeling we’re not in Kansas any more!

After much speculation it seems that another North American player will now be dominating the European trading landscape. It is surprising to learn that Kansas-based BATS Global Markets will pay the equivalent of £230 million (using today’s exchange rate) for the acquisition of Chi-X Europe. The latter firm has around 50 employees so the BATS deal suggests they are willing... Read More

More psychobabble?

The power of ‘thin slicing’ is a phrase used in psychology to explain the human’s ability to make sense of situations based on the thinnest slice of experience. I don’t know if this really works but Brussels appears to be doing exactly that. In an attempt to prevent systemic risk and another Flash Crash, the latest leaked MiFID II document (dated 7th October)... Read More

How Organised is your Trading Facility?

One of the primary aims of the review of MiFID is to provide more appropriate regulatory coverage for the multitude of different trading facilities and methods of execution that have emerged over the last 4 years. Currently, under MiFID, trading venues or platforms are classed as Regulated Markets (RMs), Multilateral Trading Facilities (MTFs) or Systematic Internalisers (SIs). A... Read More

Investors warm to the dark side

Interesting article today in efinancialnews comments that in the year to August there has been a marked increase in the overall use of dark pools compared to execution on exchange for equities. The review of MiFID is mentioned and, yes, the ability of Organised Trading Facilities (OTFs) to use discretion and prevent HFT participation on their platforms may be key to execution quality.... Read More

ESMA – Waivers from Pre-Trade Transparency

The aim of this document, published by ESMA (10/08/11), is to provide guidelines under the existing MiFID directive for competent authorities around the application of Waivers from Pre-Trade Transparency for Regulated Markets and MTFs.  Some examples of waivers granted by national competent authorities, considered at CESR or at ESMA level, are included for illustration purposes. Under... Read More

MiFI Leaks!

With reports of a draft of the revised Markets in Financial Instruments Directive circulating in Brussels in recent days, I’d like to bring you up to speed with how we are progressing in the MiFID II back-shop! We are now looking at a marked up copy of Directive 2004/39/EC – the revised Directive a new Regulation (ref tbd) that establishes uniform requirements in relation... Read More

Regulation vs Directive

I read on Tabb Forum that MiFID is looking like changing from a Directive to Regulation, although I have not seen this officially stated anywhere yet. MiFID could thus become the Markets in Financial Instruments Regulation. As a piece of regulation, and not a directive, ‘MiFIR’ would be implemented centrally from Brussels rather than being allowed to be individually... Read More

Clearing the way forward

If you haven’t yet had the chance to do so, check out the July issue of FragINSIGHT. It provides a very good overview of interoperability of clearing services, whetting one’s appetite to find out why everyone is talking about interoperability in Europe. I also invite you to read Steve Grob’s blog in which he asks “Is it time for smart clearing?”. The European... Read More

Brussels falls short!

The global securities markets have experienced a couple of weeks of extreme volatility. Unfortunately, just as they did in 2008, panicked politicians have once again got involved. On August 12th a ban on short-selling was announced by the primary venues in Spain, Belgium, France and Italy with the intention of taming the markets. Short-selling occurs when traders borrow shares and... Read More

Cheaper flights?

At times I’ve got the impression that many of the European MTFs seem to compare themselves to cheap, no-frills airlines. The emergence of MTFs post-MiFID brought lower explicit costs, with incumbent providers like the LSE forced to lower their own rates to compete. In much the same way, the arrival of Ryanair and easyJet on the scene must have put pressure on British... Read More

ESMA consults on HFT

ESMA has recently published a consultation paper on its proposed guidelines for “highly automated trading” – HFT, in other words. The guidelines follow recent studies into HFT by the global regulator IOSCO (the International Organization of Securities Commissions) and the UK Treasury. ESMA’s previously stated goal for dealing with the latest ‘bogeyman’... Read More

The R word video

If you haven’t yet had the chance to do so, check out the latest FragVision entitled The R word. In this episode Steve Grob gives us an insight into global regulation and shares his views on how highly politicized the whole process is. He suggests market forces should mark the path instead of politicians. Watch the video and participate in our discussion poll. Do you... Read More

Letter from America

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama on July 21, 2010 and the US is in the midst of a rule-making process. You may have read in the press that the US Securities and Exchange Commission (SEC) is in the process of delaying the implementation of the Dodd-Frank financial changes. Last week it was also reported that... Read More

I did not order the escargot!

As the European Commission prepares draft legislation for the overhaul of MiFID after a brief public consultation period the industry waits with bated breath. However, both the MiFID review draft legislation and the Market Abuse Directive (MAD) review have been delayed more than once and seem to be proceeding at a snail’s pace. First we’re told to expect publication... Read More

Shift in MiFID II timeline

Kay Swinburne MEP delivered an excellent update on the progress of the MiFID review at a recent conference on the Challenges of MiFID II.  She revealed that the final legislative proposal – focusing on transparency, proportional oversight of the market and investor protection – would now be completed “after the summer” and by September. Publication of the... Read More

Murky waters run deep

Why 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... Read More

The cookie monster

When assessing the impact of new EU legislation it would be fairly reasonable to assume that not all EU laws are universally welcomed by each member state and the decisions made by those in the EU can often court controversy. The most recent example being the EU’s Privacy and Communications Directive that came into force last week which requires all EU businesses running websites... Read More

Banks push FIX for fixed income trading

Regulatory changes in the form of MiFID II and Dodd-Frank are cited as drivers behind a new initiative by some of the world’s biggest sell-side banks to promote FIX connectivity for the trading of fixed income instruments, according to a recent article on Finextra.  Read More

Breaking news from TradeTech Germany – update on ECT

Kay Swinburne MEP, in her presentation at TradeTech Germany, stated that the MiFID review will legislate to provide a Consolidated Tape in line with the US model. Output and format will be mandated. As yet no decision has been made on who will operate as providers. She also mentioned that the legislators are looking to see whether a common and central audit trail can also be achieved.  Read More

… and now to the final chapters

The latest in my series of PMQs looks at further convergence of the regulatory framework and supervisory practices, covered in the final two chapters of the EC’s Public Consultation paper on the Review of MiFID. The EC is tightening up on supervision, fines and penalties and is looking to introduce a program of whistle-blowing schemes. There will be nowhere to hide and, if... Read More

On the bench

It was great to go back to Spain as one of the speakers at the ‘Leadership Roundtable’ organised by Global Investment Technology in Barcelona last week. The event, focusing on MiFID and the European trading landscape, was attended by a select audience of around 30 senior executives from MTFs to global heads of electronic trading and clearing entities. It’s... Read More

Opposing sides

I attended the Danish Securities Dealers Association’s Market Place Seminar in Copenhagen last week and was treated to some lively and interesting discussions. The startling differences between the approaches of the European regulator to the trading environment, and the opinions of the trading community and how it operates to the benefit of the investment community, were... Read More

Caveat emptor

The next in my series of PMQs looks at Investor Protection and Provision of Investment Services, covered in the EC’s Public Consultation paper on the Review of MiFID. Regulators and market participants have raised concerns about investor protection and the EC is considering revisions in this area. Have you been sold unsuitable investments? Do you fully appreciate the risks... Read More

Regulators consider putting the brakes on exchanges

MTF chiefs fear that a regulatory move to standardise controls could potentially see the incumbent exchanges with the power to suspend trading on their platforms. ESMA, one of the European Commission’s new supervisory watchdogs, is homing in on exchange controls and recently sent a questionnaire to trading firms, exchanges and multilateral trading facilities in order to better... Read More

Pension schemes breathe a sigh of relief

Politicians want to provide greater transparency in order to prevent systemic risk. Industry practitioners complained that some of their proposals would mean an increase in the costs of using derivatives as they would have to commit large levels of collateral upfront to secure trades and be forced to clear their derivatives through a central counterparty. Some of us attended... Read More

Do you GoCompare or are you Confused.com?

The Regulation team has great pleasure in bringing you a unique (and somewhat ironic) insight from Robin Strong, Head of Buy-side Market Strategy at Fidessa, in his paper entitled Do you GoCompare or are you Confused.com? One of the most topical issues from the point of view of both politicians and industry practitioners relates to the role of derivatives and fixed income. Robin... Read More

Pension schemes will be exempt from derivatives legislation despite US pressure

Seems there may still be time for more industry lobbying! Extract from article in Financial News “MEP Kay Swinburne, a former investment banker who sits on the Economics and Monetary Affairs Committee of the European Parliament, told a London trading conference that the European Parliament is considering granting pension schemes a full exemption from the new rules. The... Read More

‘Guns don’t kill people – people kill people…’

This oft quoted statement used in gun control debates attempts to apportion responsibility to a person operating a firearm rather than demonizing the firearm itself.  In applying licensing laws to firearms it would seem challenging, at the very least, to license every gun manufactured or already in existence and thus legislation is often centred on the individual.  This echoes... Read More

And then 3 buses come along…

The EC proposes regulatory intervention to improve post-trade information and facilitate data consolidation across equity and non-equity markets. So rather than participants having to consolidate this data from numerous sources themselves, data would be available as a European Consolidated Tape (ECT). In the absence of the financial industry coming up with a solution here the regulator... Read More

It’s not all about you!

I came across an interesting report published by the European Capital Markets Institute (ECMI) and CFA Institute entitled Restoring Investor Confidence in European Capital Markets. This piece of research is intended to defend the position of the European retail investor. One of the key points ECMI makes is that the initial MiFID legislation hasn’t benefited the end investor.... Read More

What will MiFID II do with transaction reporting rules?

In the latest of my PMQs I look at Transaction Reporting, covered in Chapter 6 of the EC’s Public Consultation paper on the Review of MiFID. Transaction reporting is usually a back office function. However, any change in this area could have an impact on the data that Fidessa needs to capture and store in the front office. Fidessa also has a hosted transaction reporting component... Read More

Bringing transparency to the BCN – what are your views?

A recent article in The Trade News reported: MiFID II will introduce a new regulatory regime for broker crossing networks (BCNs). Are they not subject to adequate oversight as it stands? Brokers and exchange operators have divergent views on this matter but what counts is the opinion of regulators, who have at least two reasons for tightening up BCN regulation. First, MiFID outlines... Read More

What can MiFID II do to help address excessive commodity price volatility?

The next in my series of PMQs looks at the measures specific to Commodity Derivatives covered in the EC’s Public Consultation paper on the Review of MiFID. A dry subject, perhaps, but I would say one very close to our hearts (and wallets, with pump prices close to £1.40 a litre!) as we witness economics in action. In a climate of unrest in North Africa and the Gulf, super-high... Read More

If it ain’t broke, don’t fix it!

Brokers sometimes use delayed reporting to reduce market impact for large equity trades given to them by buy-side clients on a risk basis. Currently, trade reporting can be delayed for between one hour and three days, depending on the size and liquidity of the stock, but the proposed new regime could impose a maximum delay of one day. Providing transparency to help in the construction... Read More

What will MiFID II do to improve the quality, format and costs of market data?

The latest in my series of PMQs looks at the key aspects of data consolidation covered in the EC’s Public Consultation paper on the Review of MiFID. The EC proposes regulatory intervention to improve post-trade information and facilitate data consolidation. This would apply across equity and non-equity markets. All the market feedback I have had is that there is an urgent... Read More

The pain of ill-fitting shoes!

A card pinned to the notice board at my gym last week read: “If you have seen my brown Uggs could you please return them to reception.” It had me wondering if the Uggs in question were a good fit for whoever found them. In much the same way, I’m wondering why our industry’s regulators are so keen to take a one-size-fits-all approach to the structural changes... Read More

What will MiFID II do to improve pre- and post-trade transparency?

The second in my series of PMQs looks at the key aspects of pre- and post-trade transparency covered in the EC’s Public Consultation paper on the Review of MiFID. The lack of reliable price information potentially increases the cost for investors to operate in the market. It can also discourage trading in a particular instrument with a consequent impact on liquidity. The ability... Read More

How does HFT resemble agriculture?

High Frequency Trading (HFT) is one of the hottest topics under discussion in the review of MiFID. Many of us might not be experts in HFT, but I doubt if our European Parliamentarians are either. They will be voting on HFT and whether increased regulation of this activity is needed in order to guard against the systemic risk they so desperately want to avoid. However, let’s not... Read More

What effect will MiFID II have on market structure?

In the first of our PMQs (Programme Managers’ Questions), I examine the section of the EC’s Public Consultation paper on the Review of MiFID concerned with Developments in Market Structures. With the Consultation Paper, the EC sought market input on a number of aspects of market structure reform – the creation of OTFs (what are these, you may well ask?), automated... Read More

Freaking out about market abuse

The behavioural economics book, Freakonomics, includes a chapter entitled Why do drug dealers still live with their moms? which talks about ‘foot soldiers’, small street crack dealers in Chicago. These individuals, apparently, have a one in four chance of getting killed and they will be arrested around six times during the course of their ‘careers’. All these... Read More

Welcome to PMQs

While our political leaders wrangle in the House at Prime Minister’s Question Time, we’ll be bringing you our very own version of PMQs – Programme Manager’s Questions! The Markets in Financial Instruments Directive has applied since November 2007. I’m sure many of you have fond memories of the implementation! Three years have now passed, with numerous... Read More

Beware of the Three Wise Monkeys!

There is an old proverb about three wise monkeys who see no evil, hear no evil, speak no evil. We’re looking to change that story. I have always had a fascination with markets. A major focus for me is to understand how technology interacts with legislation. This acquired taste really flourished after I started working at Fidessa. The Regulation Team, of which I’m a member,... 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

Xavier Rolet says MiFID II could threaten London

Xavier Rolet, CEO of LSE Group, expresses concerns over some MiFID II proposals and support for dark pools. Do you agree with Xavier that London’s competitive position will be adversely affected by MiFID II? Or do you think other factors, such as the higher UK taxation rate, will have a greater effect? Read the article and let us know your thoughts – leave a comment... Read More

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