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FESE’s Berthoud Elaborates on the MMT Initiative for Trade Flag Standardisation

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Marc Berthoud, vice chairman of the Federation of European Securities Exchanges’ (FESE) Economics and Statistics Committee and deputy head of data and index products SIX Swiss Exchange, explained the details of the exchange association’s recent initiative in the market data space: the Market Model Typology (MMT), to delegates at last week’s FIMA conference in London. Berthoud indicated that the group is focused on developing standards for trade flags for trade condition reporting across all markets and OTC (see the FESE website for more here).

He noted that the FESE led initiative involves participants that contribute around 90% of all of the equity trading flow across Europe and is open to all comers, be they vendors, exchanges or market participants. The standard data model has been based on recommendations made last year by the predecessor to the European Securities and Markets Authority (ESMA): a technical working group of the Committee of European Securities Regulators (CESR). Essentially it is a data model and cross reference table that maps trade flags across exchanges, multilateral trading facilities (MTFs) and OTC reporting venues.

“The scope of the project includes developing a cross reference for immediate adoption and use in vendor provided services in parallel with native adoption, which is to be achieved by gaining industry involvement,” explained Berthoud. Industry input and guidance will be particularly important for the application of these new standards to the OTC space in future, but for now, the data vendor and market operator communities are the driving force.

The development of a European consolidated tape(s) as part of the next iteration of MiFID is another important factor to consider in all of this work, as it will compel further standardisation of the market data space . The MMT steering group and technical committee are hoping that regulatory change can be used to their advantage in getting the standards adopted across Europe and beyond by achieving regulatory endorsement of the MMT standards.

However, Berthoud indicated that the standards will not initially aim to replace the trade flag practices that are currently used within individual markets and there will be no mandate for change. The MMT group is also not seeking to push the European Commission down any particular route with regards to data consolidation, he explained.

As for where the initiative is at this stage, Berthoud said that the proof of concept work has been done, protocol mapping has been completed and a first iteration of what it calls the “MMT cookbook” will soon be published for comment. “We are also looking to put in place a strong governance model for the standards initiative by next year, as well as achieving regulatory endorsement,” he told delegates. “To make sure the process is as open as possible, we have published details about how we have come to the current standards on the FESE website.”

Initially, the focus is expanding the consultation process to the FIX Protocol trade standards working group to get feedback on the progress thus far, but Berthoud indicated that the group is happy to receive feedback from other standards bodies such as ISO.

For now, the full list of initial participants in the MMT work is: Bloomberg, BME Spanish exchanges, Chi-X Europe, Deutsche Börse, the FESE secretariat, Fidessa, the Irish Stock Exchange, London Stock Exchange Group, Markit BOAT, Nasdaq OMX, NYSE Euronext, SIX Swiss Exchange, Thomson Reuters and Wiener Börse.

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