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

All Along the Watchtower: How MiFID II’s Impact on the Front Office Is Driving Banks to Mutualise

Subscribe to our newsletter

By Dan Barnes

Bob Dylan’s lyric, ‘There’s too much confusion, I can’t get no relief,’ resonates in the world of capital markets. It encapsulates the relentless regulatory and systemic turbulence.

Under the EU’s Markets in Financial Instruments Directive (MiFID II) coming into force in 2018, firms active in Europe will be hit with many new layers of process over existing mechanisms and completely new activities.

Project Sentinel is intended to reduce the challenge this presents for banks in the over-the-counter (OTC) front office. OTC trading was virtually absent from the first MiFID in 2007 and its inclusion in the 2018 directive expands the rules to capture a range of instruments and activities.

“Sentinel is very focussed on leveraging open standards to allow interoperability of components within Sentinel and components that banks have in their existing systems,” says Sassan Danesh, managing partner at Etrading Software, which is running the project on behalf of the banks.

It intends to develop shared technologies that at once provide sell-side firms with a resource that can assist in MiFID II compliance while mutualising the cost of compliance. The group recently announced that membership had grown to 10 sell-side firms.

Fred Ponzo, managing partner at consultancy GreySpark Partners. “The really big banks have the economies of scale to make the investment to comply with MiFID II pay off; the smaller firms they are really struggling. Therefore, sharing the overhead across three or four would be advantageous, across 10 will clearly help.”

The potential of the model is not lost, even on larger firms. Mark Goodman, head of foreign exchange, rates and credit (FRC) direct execution services at UBS says, “Sentinel certainly has some value in the mutualisation of cost in the face of regulation. We aren’t part of it but we certainly keep an eye on it to see what it might do for us. We see cost pressures increasing on the sell side, we see increasing cooperation around ‘utility functions’ that do not offer a competitive advantage.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Re-architecting the trading platform for interoperability, resilience and profitability

Trading platforms have come a long way since the days of exchanging paper certificates and shouting across trading floors, pits and desks in the early 2000s, but there is progress still to be made as firms strive to reduce risk, increase profitability, and make their mark in digital assets trading. This webinar will review the...

BLOG

Delta Capita and Montis Group Enhance Partnership to Develop Advanced Digital Securities CSD Infrastructure

Delta Capita and Montis Group have announced the expansion of their commercial partnership, building on their initial success in developing the Montis Central Securities Depositary (CSD) system. This digitally-native CSD system, powered by Delta Capita’s MACH Distributed Ledger Technology (DLT) platform, is designed to provide the market infrastructure needed for regulated tokenised assets, in the...

EVENT

Data Management Summit London

Now in its 14th 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 Global LEI System – Slow but Sure

After what looked like a slow start to the summer, the initiative to establish a global standard for legal entity identifiers (LEIs) took a series of significant leaps forward during August, that appears to have put the project firmly back on track. If the marketplace felt a little reticent in June and July, it could...