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Best Practice Approaches to the Data Management Challenges of MiFID II

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The data management challenges of Markets in Financial Instruments Directive II (MiFID II) are dominated by sourcing required data and managing multiple identifiers, but despite these difficulties, financial institutions expect to gain significant operational and business benefits from compliance.

Meeting the data management challenges of MiFID II was the subject of an A-Team Group webinar this week. The webinar was hosted by A-Team editor Sarah Underwood, and joined by Mark Frith, regulatory change manager, global banking and markets at HSBC; Tim Lind, global head of financial regulation solutions at Thomson Reuters; and Alexander Dorfmann, senior product manager at SIX Financial Information.

An early poll of the audience on progress towards MiFID II implementation set the scene for discussion, with 40% of respondents in the planning stage, 36% starting implementation, 17% having made significant progress, and 8% not yet started. Reflecting the poll results and noting that MiFID II can seem overwhelming, the panel agreed that planning is essential to cover the requirements of the regulation, including extended asset classes, instrument classification, use of the ISIN identifier for all instruments, identifying systematic internalisers, best execution, transparency and the requirement to aggregate large volumes of data and make regular disclosures.

Considering the scale of the regulation, Frith talked about the need to take a strategic approach and described how HSBC is distilling MiFID II into chunks by looking across the trading lifecycle. Dorfmann suggested that while large banks are taking a strategic approach to the regulation, he expects some regional and smaller banks to wait for the regulation’s final Regulatory Technical Standards (RTS) to be published by the European Securities and Markets Authority (ESMA) and then take a more tactical approach.

While reference data is the cornerstone of MiFID II, it is also raising numerous challenges. A second audience poll showed 73% of respondents facing problems around sourcing required data and 52% struggling to manage multiple identifiers.

Despite these difficulties and a lack of final technical standards from ESMA, financial institutions do expect to gain operational and business benefits from MiFID II compliance. Lind suggested they will also develop additional skills through the implementation of such a complex regulation and may be able to apply MiFID II elements such as rules and workflows to other regulations and achieve a more harmonised approach to compliance.

Offering some final advice to data practitioners working on MiFID II, Dorfmann cautioned against starting another database project for the regulation and instead suggested a focus on sourcing data. Frith advised practitioners to be strategic, drive consistency across their organisations and aspire to agile systems that can react to regulatory change. Lind concluded with the need for good data governance and a recommendation to seek advice wherever it is available.

Listen to the webinar to find our more about:

  • Progress on MiFID II implementation
  • Outstanding data management issues
  • How to source and manage required data
  • Steps to meet MiFID II reporting requirements
  • Operational and business benefits of compliance
  • Expert guidance and advice on implementation
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