About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Talking Intelligent Trading with Andrew Delaney: MiFID II and the Coming Post-Trade Revolution

Subscribe to our newsletter

Word has it that ESMA is serious about its intention to publish its final guidance on MiFID II this month. With a possible (unconfirmed) publication date of September 24 doing the rounds, the market is bracing itself for a vigorously more prescriptive approach than under MiFID I, with less wiggle room for divergence from the base requirements.

Here on Intelligent Trading Technology, we’ve been busying ourselves assessing the impact of various aspects of the incoming regulation, which takes effect in January 2017 – just 15 months away.

As might be expected, we’re looking at how MiFID II will change the execution landscape with changes to the rules governing systematic internalisation and the introduction of Organised Trading Facilities (OTFs). We’re keeping an eye on how emerging rules on pre-release ‘production’ testing of trading algorithms will be applied. And we’re watching how firms respond to new reporting requirements across the board, being introduced in the name of transparency and the avoidance of systemic risk.

Another, less obvious aspect is the impact of MiFID II on the post-trade environment. Building perhaps on the US’s Dodd Frank Act, and as part of its remit to implement the T+2 clearing and settlement requirements set out by the G20, MiFID II will address the longstanding inconsistency that characterise post-trade processes particularly in the derivatives markets.

The market is bracing itself for MiFID II and its sister MiFIR regulation because they will push firms to replace archaic, often manual processes with the kind of workflow-based systems that can generate the kind of auditable transaction data sets that meet their transparency obligations. Achieving this, particularly in as short a timeframe as 15 months, will force significant investment in post-trade infrastructures to meet the new requirements.

But according to David Pearson, who looks after the post-trade business at Fidessa, the incoming requirement presents sell-side institutions with an opportunity to drive traditional business. Fidessa’s Affirmation Management Service (AMS) is one of a number of third-party offerings vying to establish order in the post-trade space. By demonstrating tighter, auditable post-trade processes, sell-side firms can differentiate their service offering to buy-side clients, which themselves are looking to solutions under a very tight timeframe. AMS provides a mechanism for buy- and sell-side firms to affirm trades with one another directly (you can download a white paper on the topic here.

As the ESMA guidance comes to ‘market’, Intelligent Trading Technology will be monitoring progress. And this post-trade differentiation will feature in our upcoming Intelligent Trading Summits, taking place in London on February 4, 2016, and in New York next May. Stay tuned for more about those in coming weeks.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: High-Performance Networks & Low-Latency Connectivity for Trading

With financial markets becoming more complex and interconnected in today’s electronic trading environment, trading firms, exchanges, and infrastructure providers need to continually push the boundaries of network performance to stay ahead. Ultra-low latency, seamless connectivity, and resilient infrastructure are no longer just advantages – to stay competitive, they’re necessities. This webinar, part of the A-Team...

BLOG

Navigating Global Stablecoin Regulation

Stablecoins have surged from niche crypto curiosities to pivotal elements of global finance. Pegged to fiat currencies or other assets, these digital tokens promise near-instant settlement, lower transaction costs, and 24/7 liquidity-features reshaping capital markets and payment infrastructures worldwide. However, this rapid growth has drawn intensified regulatory scrutiny, particularly across the G20, where authorities grapple...

EVENT

Data Management Summit London

Now in its 16th year, the Data Management Summit (DMS) in London brings together the European capital markets enterprise data management community, to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

The DORA Implementation Playbook: A Practitioner’s Guide to Demonstrating Resilience Beyond the Deadline

The Digital Operational Resilience Act (DORA) has fundamentally reshaped the European Union’s financial regulatory landscape, with its full application beginning on January 17, 2025. This regulation goes beyond traditional risk management, explicitly acknowledging that digital incidents can threaten the stability of the entire financial system. As the deadline has passed, the focus is now shifting...