By Uri Inspector, Staff Reporter
FlexTrade has integrated SmartStream RDU’s Systematic Internaliser (SI) Registry into the FlexTrader execution management system (EMS) to help FlexTrade customers comply with new MiFID II reporting regulations coming into force from September 2018. The development will allow FlexTrade clients to ascertain the SI status of counterparties before they decide to trade with them.
Understanding the SI status of counterparties affects firms’ trade and transaction reporting obligations. From September 1, SIs will be required to report their quotes and trades to the marketplace across all instruments (with a few exceptions in the commodities and derivatives markets) through a new framework of pre- and post-trade reporting created by MiFID II.
Furthermore, the regulation places greater responsibility on SIs as the counterparty mostly charged with fulfilling trade reporting obligations within 15 minutes (five minutes after 2020) of execution. Reporting responsibilities include recording details of the trade, as well as reference data describing the assets and counterparties involved in the transaction.
The SmartStream SI registry – borne out of a collaboration between SmartStream RDU and a group of Approved Publication Arrangements (APAs) – allows the growing population of SIs to register the details of the financial instruments and asset classes for which they are providing services in a single centralised register. The registry enables traders, in this case Flextrade clients, to perform a pre-trade check before they decide on using an SI or non-SI as a counterparty, determine which counterparty should report and provide much needed transparency to the market.
Through an API, SmartStream RDU’s SI registry will be imbedded into the send order ticket on the FlexTrader EMS – FlexTrade’s broker-neutral algorithmic trading platform for equities, foreign exchange and listed derivatives – so that when a trader is sending an order and selecting a broker, the call to RDU SI registry API is made. This is part of FlexTrade’s open architecture approach, so mutual clients of FlexTrade and RDU will have a ready-made integration available.
According to Peter Moss, CEO of SmartStream RDU, “The SI Registry offers transparency that is needed as part of the trade work flow and integration into FlexTrader EMS, making it easy for our mutual customers to make more informed choices. With the mandatory SI regime commencing from the 1st September this year, we see more brokers offering SI services and growing demand from clients to understand who is offering what.”
FlexTrade says its integration with the SmartStream RDU is fully cross-asset and embedded directly into the send order ticket as a flag to identify whether the selected counterparty is operating as an SI in the given instrument, optimising firms’ efforts to ensure best execution.