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Itiviti Develops Regulatory Compliance Platform for MAR and MiFID II

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Itiviti is developing a regulatory compliance solution that will be delivered as a managed service, focus first on Europe’s Market Abuse Regulation (MAR), and then on Markets in Financial Instruments II (MiFID II). The solution is based on Itiviti’s Tbricks high performance trading platform and the OneTick ticker plant provided by Itiviti partner One Market Data.

Itiviti, which was formed earlier this year by uniting Orc Group and CameronTec Group, is preparing a MAR compliance solution, Itiviti Analyst MAR, ahead of the effective date of the regulation on July 3rd, 2016. The regulation extends the scope of Europe’s Market Abuse Directive (MAD) and covers insider dealing disclosure and market abuse, as well as measures to prevent market abuse to ensure the integrity of financial markets and enhance investor protection. It also sets down uniform rules on sanctions for insider dealing and market abuse that must be implemented across Europe, and extends regulation to asset classes including shares, exchange traded funds, derivatives and bonds.

Itiviti Analyst MAR covers all aspects of MAR by continuously monitoring and detecting events such as insider dealing and market abuse, raising alerts and providing tools for analysis and investigation of detected breaches. To achieve this, the solution stores tick by tick market data, news and benchmarks in the OneTick ticker plant and uses Tbricks to consume orders and trades using a FIX drop copy, and to visualise alerts. The use of a FIX drop copy allows integration not only with the Tbricks trading platform, but also with third party platforms.

Christer Wennerberg, vice president of market structure strategy at Itiviti, explains: “Our clients are concerned about MiFID II, but also about MAR as its effective date is so close. There is substantial overlap between MiFID II and MAR, so we looked at the economies of scale and scope around providing a solution for MiFID II and a solution for MAR at a small incremental cost. The outcome is Itiviti Analyst MAR, a managed service that provides real-time analysis of trading flows and market data to detect any market abuse such as layering or spoofing.”

Easing the burden of implementation, Itiviti Analyst MAR allows multiple clients to share the tick database market data, while Itiviti helps clients set up their own database of orders and transactions within the database. The solution meets MAR requirements to store all market data, orders and transactions for five years, and allows a compliance officer to create a Suspicious Transactions and Orders Report automatically.

Itiviti acknowledges that many Tier 1 banks already have a tick database that could be used to support MAR compliance, but notes that financial institutions on lower tiers are unlikely, for reasons of cost, to have this type of database. With MAR mandating automation of insider dealing disclosure and market abuse reporting, the company says interest in its solution is coming from both existing and potential clients.

With Itiviti Analyst MAR near completion and storing order and transaction data from day one of production, Itiviti is developing additional modules for the Itiviti Analyst platform. A transaction cost analysis module is expected to be the next addition, followed by MiFID II compliance modules covering best execution analysis, algorithmic trading monitoring and market maker compliance.

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