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MiFID II

MiFID II begins as the finance industry takes a breath

John Mason

24 Jan 2018

MiFID II begins as the finance industry takes a breath
Photographer: Cathal McNaughton

So the ‘sleeps til MiFID II’ clock finally ticked down to zero and the industry flicked the switch on Jan 3rd.  As City A.M. nicely phrased it, the “Day of the MiFIDs” was upon us.

As I look back on the first week, fortunately the drama and horror promised has not been echoed by its financial namesake. As we stand, the general consensus in London seems to be that we can all breathe again.

Learn what exactly MiFID II is and why it is so important

We shouldn’t underestimate the magnitude and scale that’s been undertaken here though. Across our own MiFID programmes we:

  • Updated and implemented 76 fundamental changes to existing exchange and MTF feeds;
  • On-boarded new APA venues;
  • Enhanced our Multilateral Trading Facility;
  • Strengthened our Eikon desktop’s MiFID II research unbundling compliance capabilities and;
  • Introduced millions of new instruments into our reference data solutions.

All in all, a huge amount of moving parts, not to mention the late alterations and specifications coming out of the regulators.  And we are not alone of course; other vendors have all had to wrestle with similar issues and challenges.

MiFID II begins as the finance industry takes a breath

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The Evolution of MiFID II

The MiFID II mandate on the use of Legal Entity Identifiers (LEI) to identify clients, counterparties and issuers, and the industry mantra of No LEI, No Trade, remains a challenge for many firms.

On December 20, 2017, the European Securities and Markets Authority (ESMA) announced a six month Legal Entity Identifiers (LEI) grace period, but firms must be in the process of obtaining client LEIs.

The pressure is still on and solutions such as Thomson Reuters LEI Profiling Service can ease the burden by providing insight into your clients LEI status to identify the gaps in your LEI universe.

MiFID II begins as the finance industry takes a breath

The scale of MiFID II

To put some of this into context, we saw a 50% increase in Q4 over the normal number of changes that existing exchanges would make to cater for MiFID II.

This was mirrored in Q3 as well so a huge increase in change yet the systems seemed to have coped.

I can only take my hat off to all the technology staff across the industry who have worked endless hours and days for the 3rd to come and go with such little drama.

MiFID II begins as the finance industry takes a breath

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That’s not to say it’s gone completely glitch free though. If MiFID II were a Geiger counter, there would be background radiation.  The needle would be ticking and the clicks would be, well, clicking.

There is noise that needs to be addressed, but no huge spike across the industry.

What’s the future of investment research? What MiFID II issues lie ahead for Europe? Debt capital markets: No panic as the ‘old normal’ returns Adjusting for the optimism of the sell-side analyst Asia Pacific Summit: The upsides of buy-side The platform to digital transformation in financial trading MiFID II progress summary report: Why there’s still work to do MiFID II best execution: Are firms ready for RTS 27 and 28? Powering asset management – Overcoming research unbundling Regulatory intelligence: Unlocking value in content