The 3 January, 2018 compliance deadline for Markets in Financial Instruments Directive II (MiFID II) is approaching fast, so how ready are financial institutions to meet the directive’s requirements and what outstanding data management challenges do they face? A recent A-Team Group webinar answered these questions and more, highlighting the need to get cracking on data management challenges presented by the regulation, and suggesting that problems can be eased by consolidating regulatory data in a single repository.
The webinar, Putting Data Management Processes in Place for MiFID II, was moderated by A-Team editor Sarah Underwood and joined by Geoffroy Vander Linden, co-chair of the FIX Community MIFID II Trade Reporting Group; Rob Pughsley, principal sales engineer, financial services at MarkLogic; Dermot Harriss, senior vice president, regulatory solutions at OneMarketData; and Greg Van Droogenbroeck, head of regulatory and accounting products, enterprise solutions at Bloomberg.
p>An early poll of the webinar audience showed 38% of respondents just starting work on MiFID II compliance, 32% somewhat ready for the regulation, 25% in the planning stage and 5% not ready at all. A second poll showed 56% of respondents taking a strategic approach to MiFID II at this stage of the game, with 44% taking a tactical approach. Whatever the approach, a third poll identified persisting MiFID II data management challenges as sourcing new data requirements, achieving accurate and timely data, managing large volumes of data, creating a single data repository, and working across data siloes.
Commenting on how firms are approaching MiFID II compliance, Harriss noted the need for a strategic approach considering the breadth and depth of the regulation, rather than a tactical approach that could be error prone. He said: “The benefits of a successful strategic approach include lower cost of ownership and the ability to turn the cost of compliance into revenue
generating opportunities. A tactical approach has no side benefits and is all about cost.”
Discussing the data management challenges of MiFID II, Van Droogenbroeck said the huge data requirement of the regulation means some firms do not have adequate systems and could benefit from using cloud services, particularly off-the-shelf services rather than in-house builds.
Looking at how best to manage all the data required for MiFID II, including standard data such as classification codes (CFIs), legal entity identifiers (LEIs) and extended use of ISINs to identify OTC derivatives, Pughsley noted the need to consolidate data, and commented: “A holistic view of data is critical on the path to compliance with MiFID II and other regulations.”
Moving on to MiFID II solutions, Harriss noted the potential of time series databases, while Van Droogenbroeck described an integrated, single source solution that can optimise firms’ compliance. On implementation strategy, Vander Linden ran through the need for an early compliance programme and a steering committee to handle accountability and ensure enough budget, and the need to identify development areas and assign business and compliance owners. He added: “You also need to decide whether to buy or build a solution, if you choose to partner do that early this year, and take part in an industry working group.”
Final advice for practitioners working on data management for MiFID II included automating as many processes as possible, aligning regulations and reporting rather than taking a tactical approach to each regulation, sourcing consistent data from the back to the front office, and keeping an eye on revenue opportunities.
Listen to the webinar to find out more about:
- Readiness for MiFID II
- Expected regulatory tolerance
- Data management challenges
- Technology solutions
- Beneficial outcomes