Project Sentinel, a consortium of banks working to mutualise the cost of implementing Markets in Financial Instruments Directive II (MiFID II) in the OTC front office, will pass a significant milestone on Monday 3 April when Adaptive, a software firm selected by Sentinel as a technology provider, will deliver the backbone of the Sentinel solution that will ensure end-to-end compliance with MiFID II.
The initial three banks in the Sentinel consortium – one each in Europe, Asia Pacific and the US – signed up to the project when it got underway in April 2016 under the auspices of technology consultancy Etrading Software. The banks have already started to integrate with early elements of the MiFID II compliance solution, which runs on the Google Cloud Platform and is being deployed as software-as-a-service (SaaS), but Monday’s code drop will provide a complete platform and components ready for testing and enhancement.
The Sentinel solution has been designed over the past nine months, with technology providers Google, Adaptive and AppsBroker, a Google partner helping drive Google Cloud and apps adoption, being selected in September 2016. Implementation started in December with members of Sentinel beginning to integrate technology components with internal systems in March 2017. A fully tested and compliant version of the platform is planned for the end of Q3 2017.
The Sentinel platform is based on a normalised regulatory model, sales-trader workflow, a regulatory rules engine and reporting engine. Sentinel members can choose which of eight front office and reporting components they want to implement.
While only three banks are signed up to the project at the moment, Grant Wilson, a managing partner at Etrading Software, says a further 15 banks are looking at the Sentinel model and deciding whether to join, decisions that will inevitably lead to discussion about the three initial banks’ ownership of 100% of the IP in Project Sentinel.
While many banks are building or buying their own solutions for MiFID II compliance, the consortium behind Project Sentinel aims to mutualise the cost of compliance, achieve a consistent interpretation of incoming regulation, work with future proof and flexible technology, and be able to direct development of the technology to an extent that is limited by vendor solutions.
Sassan Danesh, also a managing partner at Etrading Software, explains that while Project Sentinel will ease the pain of meeting MiFID requirements in the OTC space, which lacks digitised solutions, it could also provide support for other asset classes, particularly those that are less liquid, such as credit.