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FIX Reference Data Subgroup Update: Reference Data and MiFID II/MiFIR

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By Chris Pickles, Co-Chair of FIX Trading Community’s Reference Data Subgroup and Member of the Bloomberg Open Symbology Team

Reference data has traditionally been treated as a ‘back-office’ function – almost as though only data that is fast-changing has relevance to a firm’s trading operations. But for more and more firms today, reference data has become an enterprise-wide issue.

Whether it’s publishing trades to the world to comply with market transparency regulations, or ensuring the delivery of accurate transaction reports to regulators to comply with surveillance regulations, or delivering reference data to regulators about the more-complex traded instruments in order to comply with risk management regulations, there’s one common principle – ‘comply’.

MiFID II and MiFIR have truly brought home this principle when it comes to reference data. Firms complained about the lack of detailed requirements in principles-based MiFID I. So now MiFID II and MiFIR go into the minutiae of regulatory requirements – literally down to dotting the ‘I’ and crossing the ‘t’ in everything. ESMA has been asked how much flexibility firms have in their reporting, and the feedback is that firms have been told that they have no flexibility whatsoever. What ESMA specifies in its Technical Specifications is exactly what you have to deliver – otherwise you have failed to comply.

Take one tiny example – a date format. ESMA has specified an ISO-standard date format (ISO 8601 extended) that has hyphens between the year/month/day. If you don’t use the right version of ISO 8601, you won’t have the right numbers in the right place. That would cause a report to be rejected.

So the devil of compliance really is in the detail – right down in the reference data. And nobody in the firm should assume automatically that the right people in the firm know all of this detail already. Trying to understand and deal with all this detail on your own is immensely daunting and nigh-on impossible, so joining in conversations with your industry peers – not just your peers within your own firm – and sharing experiences increases the likelihood that you will come up with the right approach for your own firm. It’s about applying one of those important things that so many industry gurus talk about – ‘collaboration’.

FIX Trading Community now has an active Reference Data Subgroup looking at all of these issues in the draft Technical Standards that ESMA has issued so far. Major banks and brokers, exchanges, ARMs, data vendors and software solution providers are already taking part in this Subgroup to identify the reference data challenges that they will have to address in order to comply with MiFID II and MiFIR.

Taking apart technical specifications one at a time and looking for the problems and their commonality is helping participants to build a better understanding of the questions that they have to ask their own Compliance, IT and Business teams. This is the serious grids-up reference-data work that has to be done if you are going to able to comply with MiFID II/MiFIR by January 2017.

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