The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Firms Face Lack of Clarity on MiFID II Data Transparency Obligations

Meeting the data transparency obligations of Markets in Financial Instruments Directive II (MiFID II) continues to be a challenge for financial institutions struggling to manage the scale of change presented by the regulation, improve data quality to achieve transparency, and implement solutions without final clarity from the European Securities and Markets Authority (ESMA) on outstanding issues.

The problems raised by the data transparency requirements of MiFID II were discussed during A-Team Group’s recent Data Management Summit in London. While MiFID II was very much on the agenda, its transparency elements were the subject of a specific panel moderated by John Mason, global head, regulatory content propositions at Thomson Reuters, and joined by Gaurav Bansal, MiFID II programme director at Tilney Bestinvest Group; Peter Moss, CEO at the SmartStream Reference Data Utility (RDU); and Tony Russell, director at Commerzbank.

Kicking off the conversation, Moss described the challenges of data transparency including the scale of change required by MiFID II, the need for data quality and the inverse problem of hundreds of organisations submitting mixed quality reference data to regulatory agents. He did, however, point out that this should improve over time.

Russell said: “We have been working on MiFID II for 18 months, but I am still worried about the 3 January, 2018 deadline. We need to achieve a speed of 15 minutes to report, manage complexity, particularly around OTC derivatives, review voice trading and deal with a lack of clarity on some points of the regulation.”

From the buy-side perspective, Bansal commented: “We are focussing on transaction reporting, which requires a huge amount of data capture. Our immediate focus is compliance, but from there on we see no standardisation of how data will be communicated. ESMA is not specific on standards, so next year standards will continue to be a challenge.”

Issues around the use of ISINs to identify OTC derivatives were also raised as potential barriers to transparency, with Russell suggesting clarity is required from EMSA on this and Moss agreeing as the SmartStream RDU gears up to cope with millions of ISINs under MiFID II.

With data transparency challenges and a lack of regulatory clarity still to be ironed out, the panel turned its attend to the expectations of regulators come the MiFID II compliance deadline. Russell said: “Regulators will expect firms to have tried. They won’t expect systems to be working perfectly, but they will expect firms to have put in effort to get to where they should be. Mid-year next year, regulators will be looking closely at what firms are actually doing. They will want to see improvements in data quality, connections to Approved Publication Arrangements (APAs) and Approved Reporting Mechanisms (ARMs), as well as delivery of best execution.”

Considering the enormity of change required by MiFID II, Moss concluded: “The window is closing for our industry to get everything together. More clarity is critical, but data transparency will still be a challenge that the industry rather than regulators will resolve.”

Join A-Team’s Data Management Summit in New York City next week to hear more about MiFID II and other regulations that will have an impact on your business and operations.

Related content

WEBINAR

Upcoming Webinar: Managing unstructured data to ensure regulatory compliance and add value

Date: 2 November 2021 Time: 11:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes As unstructured data floods into capital markets in the wake of traditional structured data, firms must manage both data types and ensure ease of access to extract data required for regulatory compliance efficiently and effectively. Beyond compliance, firms can...

BLOG

Opensee Platform Provides Self-Service Big Data Analytics for Business Users

Paris-based ICA, a provider of big data analytics, has rebranded as Opensee, marking its evolution from an innovative capital markets data analytics platform to a market challenger. The company’s offer is to make hundreds of terabytes of structured data accessible to business users easily and quickly through self-service data analytics tools. The company was initially...

EVENT

Data Management Summit USA Virtual

Now in its 11th year, the Data Management Summit USA Virtual explores the shift to the new world where data is redefining the operating model and firms are seeking to unlock value via data transformation projects for enterprise gain and competitive edge.

GUIDE

ESG Handbook 2021

A-Team Group’s ESG Handbook 2021 is a ‘must read’ for all capital markets participants, data vendors and solutions providers involved in Environmental, Social and Governance (ESG) investing and product development. It includes extensive coverage of all elements of ESG, from an initial definition and why ESG is important, to existing and emerging regulations, data challenges...