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MiFID II Drives Widespread Market Data Operations Changes

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As the largest European exchanges, along with many other European trading venues, change or update systems to be compliant with MiFID II provisions concerning best execution, firms are finding they must also update the way they interact with these exchanges and venues.

Market data and automated trading order execution systems provider Redline Trading Solutions has launched updated exchange interfaces for European venues, according to officials of the company.

“We provide technology to receive and interpret data, and present it to our customers,” says Matt Sexton, founder and chief technology officer of Redline Trading Solutions. “The exchanges are driven by a couple trends. First is the need to get a higher message rate from the exchange’s customers for lower latency and higher throughput. Second is responding to MiFID II regulations requiring them to publish more information and more transparent information.”

The timing of the January 3, 2018 date on which MiFID II takes effect means that exchanges are, in effect, inserting an extra batch of systems updates into their usual major technology refresh cycles of several years, according to Sexton. “The enforcement function of MiFID II means … they must roll out these changes more quickly to meet requirements for what data exchanges publish, its accuracy, precision and standardisation.”

The London Stock Exchange has installed its Group Ticker Plant, replacing its legacy MITCH interface. Euronext has gone live with its Optiq Market Gateway for cash markets, and will roll out the platform for derivatives in July. Deutsche Börse has moved its Xetra cash markets onto its T7 Release 5.0 trading architecture, where it will begin trading equities and ETFs in July.

Nasdaq OMX Nordic, the Vienna Stock Exchange and SIX Swiss Exchange are each planning to update protocols for MiFID II compliance in the fall. In addition, Bats Trading updated its European guidelines in February and May, and the FIX Trading Community has its Market Model Typology initiative for post-trade data standardisation in response to MiFID II.

Redline found that the various European exchange systems updates affected its customers, according to Sexton. “MiFID II applies not just to the exchanges but to our customers in many cases because they have greater best execution requirements,” he says. “They may consume even more market data than they did in the past because … they need the whole European order marketplace in order to make sure they’re getting the best execution for their customer.”

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