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

IOSCO Technology Focused Report Highlights Post-trade Data Fragmentation, Timeliness Issues

Subscribe to our newsletter

Although it is largely focused on the impact of front office technology and developments such as high frequency trading, the International Organisation of Securities Commissions’ (IOSCO) recent consultation report also highlights the need for greater timeliness and transparency into post-trade data. Referencing its recent report on dark liquidity, IOSCO notes that market fragmentation across new venues such as dark pools and developments such as direct electronic access (DEA) have resulted in a number of data related challenges.

“Market fragmentation and the presence of dark liquidity may raise concerns around transparency and the efficiency of the price formation process. For example, competition between trading venues leads naturally to fragmentation of market data as each venue separately publishes the trades that take place on its systems,” states IOSCO in its consultation paper. This has been a common theme during the post-MiFID years, given that opening up the markets to new entrants has meant it is much harder to view consolidated price information.

“Whilst consolidation services exist to integrate the separate data streams, there is a risk that in some jurisdictions some market participants are unable to afford such services and/or the data itself, potentially affecting the price discovery process for these participants. Similarly, the ability to trade on a dark basis may lead to a less efficient price formation process if the level of trading that remains lit is not sufficient to establish a market price that accurately reflects the totality of buyer and seller interest,” notes IOSCO.

In terms of data issues related to direct electronic access, the report suggests that intermediaries should “disclose to market authorities, upon request and in a timely manner, the identity of their DEA customers in order to facilitate market surveillance. In turn, markets should provide their members with access to relevant pre- and post-trade information (on a real-time basis) to enable these firms to implement appropriate monitoring and risk management controls.” The trade and reference data must therefore be in a suitable format and readily accessible in order to meet these real-time requirements.

IOSCO also highlights the need for intermediaries to disclose to market authorities upon request and in a “timely manner” the identity of their DEA customers in order to facilitate market surveillance. Customer and client data must therefore be kept in an easily accessible and consolidated system in order to report this back to the authorities in the required timeframes. This principle is essentially aimed at ensuring that market authorities have the ability to identify the source of orders or trades for market surveillance purposes.

The vast majority of the paper discusses and suggests recommendations for requirements to be introduced for front office, risk management and trading systems. However, in order to meet these reporting requirements there is a need to enhance the underlying data management infrastructures supporting these risk and trading systems.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to harness the power and potential of ownership data

The importance of ownership data has escalated over the past few years as financial institutions have acknowledged its potential. Key use cases include integrated risk assessment, which uses ownership data to help financial institutions gain a clear understanding of supplier and customer networks, and identify and mitigate risk. Equally significant is the use of ownership...

BLOG

Making the Case for Master Data Management

Master data management (MDM) is not a new concept for capital markets participants, but it can be an effective approach to data management when financial institutions face rising costs of ingesting, holding and using data, or when they restructure. Its benefits include streamlining workflows, reducing input error, lowering costs and unlocking the full value of...

EVENT

ESG Data & Tech Summit London

The ESG Data & Tech Summit will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

GUIDE

Regulatory Data Handbook 2022/2023 – Tenth Edition

Welcome to the tenth edition of A-Team Group’s Regulatory Data Handbook, a publication that has tracked new regulations, amendments, implementation and data management requirements as regulatory change has impacted global capital markets participants over the past 10 years. This edition of the handbook includes new regulations and highlights some of the major regulatory interventions challenging...