So the ‘sleeps til MiFID II’ clock finally ticked down to zero and the industry flicked the switch on Jan 3rd. As City A.M. nicely phrased it, the “Day of the MiFIDs” was upon us.
As I look back on the first week, fortunately the drama and horror promised has not been echoed by its financial namesake. As we stand, the general consensus in London seems to be that we can all breathe again.
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We shouldn’t underestimate the magnitude and scale that’s been undertaken here though. Across our own MiFID programmes we:
- Updated and implemented 76 fundamental changes to existing exchange and MTF feeds;
- On-boarded new APA venues;
- Enhanced our Multilateral Trading Facility;
- Strengthened our Eikon desktop’s MiFID II research unbundling compliance capabilities and;
- Introduced millions of new instruments into our reference data solutions.
All in all, a huge amount of moving parts, not to mention the late alterations and specifications coming out of the regulators. And we are not alone of course; other vendors have all had to wrestle with similar issues and challenges.
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The Evolution of MiFID II
The MiFID II mandate on the use of Legal Entity Identifiers (LEI) to identify clients, counterparties and issuers, and the industry mantra of No LEI, No Trade, remains a challenge for many firms.
On December 20, 2017, the European Securities and Markets Authority (ESMA) announced a six-month Legal Entity Identifiers (LEI) grace period, but firms must be in the process of obtaining client LEIs.
The pressure is still on, and solutions such as our LEI Profiling Service can ease the burden by providing insight into your clients’ LEI status to identify the gaps in your LEI universe.
The scale of MiFID II
To put some of this into context, we saw a 50% increase in Q4 over the normal number of changes that existing exchanges would make to cater for MiFID II.
This was mirrored in Q3 as well, so a huge increase in change, yet the systems seem to have coped.
I can only take my hat off to all the technology staff across the industry who have worked endless hours and days for the 3rd to come and go with such little drama.
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That’s not to say it’s gone completely glitch-free, though. If MiFID II were a Geiger counter, there would be background radiation. The needle would be ticking and the clicks would be, well, clicking.
There is noise that needs to be addressed, but no huge spike across the industry.
Transaction Reporting and Record Keeping: the bringing together of a record of every order, execution and transaction event