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

A-Team Insight Blogs

Tumbling Down the Rabbit Hole

By Christian Voigt, Senior Regulatory Adviser at Fidessa

With much of the MiFID II Level 2 text close to being finalised, the markets continue to dive even deeper into the details and home in on Level 3 material, such as the Q&As and ESMA guidelines.

One such detail lies in the phrase “traded on a trading venue” which is used in MiFIR to define instrument scope for topics such as pre- and post-trade transparency, systematic internaliser, trading obligation and transaction reporting across derivatives and equities. For instance, the trading obligation (i.e. requirement to trade on-exchange) covers all shares traded on a trading venue. How can a broker bound by the rules of MiFID II execute non-EU stocks if those stocks also happen to be traded on venues within the EU? As the Fidessa Fragulator shows, around 0.15% of trading in Apple’s stock is conducted on EU exchanges and is therefore potentially in scope of the MiFIR trading obligation. But what of the other 99.85% of Apple liquidity, how is that to be treated? Will non-EU venues all become recognised as equivalent under MiFID II or will non-EU trading be classed as OTC and become inaccessible to any EU broker? The latter would severely restrict brokers in their quest for best execution.

With financial institutions and regulators heading deeper down the rabbit hole by focusing on the minutiae of some of the most technical issues of MiFID II, some might start to ask what kind of wonderland awaits us post-implementation.

Related content

WEBINAR

Recorded Webinar: Improving data integrity to address regulatory requirements

Financial institutions today face a global regulatory landscape characterised by rigorous and varied reporting requirements across their businesses. Reporting challenges include completing more data fields across more lines of business with greater frequency, adding complexity and cost. At the same time, there is waning tolerance among supervisory bodies for errors, issues or delays – as...

BLOG

BayernLB Selects Broadridge for SFTR, EMIR/MiFIR, MMSR Trade and Transaction Reporting

Bayerische Landesbank (BayernLB) has selected Broadridge Financial Solutions’ platform to meet its trade and transaction reporting obligations across a range of regulations including SFTR, EMIR and MiFIR, as well as the European Central Bank’s money market statistical reporting (MMSR) requirements. The deployment – is aimed at streamlining and consolidating all of its regulatory trade reporting...

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...