The data transparency obligations of Markets in Financial Instruments Direct II (MiFID II) are a drastic change from MiFID requirements and call on market participants to make significant modifications to data management, sourcing, publication and distribution. Faced with this level of change, only a handful of firms are completely prepared to meet the transparency requirement.
The challenges of MiFID II data transparency and how best to approach them were discussed during a recent A-Team Group webinar – one of several events in A-Team’s 2017 MiFID II programme. The webinar, MiFID II: Data for transparency, was moderated by A-Team editor Sarah Underwood and joined by Beata Born, global MiFID II trading project lead at UBS; Irina Sonich-Bright, director of global markets electronic product and head of business development at Credit Suisse; John Mason, global head of regulatory and market structure propositions in the financial and risk division at Thomson Reuters; and Dermot Harriss, senior vice president of regulatory solutions at OneMarketData.
An early poll of the webinar audience showed 71% of respondents saying the transparency provisions of MiFID II are a drastic change compared to those of MiFID, 24% saying they may be a drastic change and just 5% saying they are not a drastic change. Whatever the extent of change, the challenges identified by a second audience poll showed a pretty even split of opinion across data management, publication and distribution of data, data sourcing and managing non-equity instrument data.
The panel agreed with the multi-dimensional nature of the MiFID II data management problem around transparency, and noted the need to pursue uniformity in response to the complex and diverse requirements of the regulation. A useful approach for some firms may be to simplify data usage, perhaps by questioning how many trading venues are really needed and how much data management can be outsourced to organisations such as Approved Publication Arrangements (APAs).
Technology services and solutions to support compliance include data feeds that allow users to absorb data on a tick-by-tick basis and time series databases that can bring data together based on time.
From a data publication requirements perspective, the panel noted that APAs offer what is needed at similar prices, leading firms to decide on which APA to use based on different aspects of provision, such as whether data is stored in Europe or the US. On the potential for a consolidated tape, panel members said that although the European Securities and Markets Authority (ESMA) has yet to state its case on the exact format of a tape, there will be a consolidated tape, but not quite as we know it.
The winners in the MiFID II data transparency debate will be those that treat the requirements holistically, organise data to answer regulatory questions, and develop a data resource with beneficial use cases beyond regulation.
Listen to the webinar to find out more about:
- Transparency requirements of MiFID II
- Data management challenges
- Technology services and solutions
- Approved Publication Arrangements
- Advice for data management practitioners