SIGNIFICANT CHANGES FOR FRONT OFFICE
Sales and trading - a new landscape
If your clients are asking about MiFID II, you should be too.
Transforming the non-equities markets
MiFID II challenges existing market structures, workflows, processes and procedures, introduces new participants into the marketplace and exposes previously private dialogs and transactions to the wider market. There will be no more phone orders or one-to-one private transactions.
Front office sales and trading teams will feel and see the greatest impact from these new sell-side requirements, almost across the entire workflow – dealing with the new liquidity landscape, the challenges and opportunities presented by transparency, as well as significant additional responsibilities introduced at the point of sale.
Where is the greatest impact?
- Client sales process – With tighter controls on products, increased investor protections, increased demand for transparency and record keeping, sales desks will need to follow several new procedures
- Best execution – While already a premise set by MiFID I, you will now need to accurately report performance and actively assess and optimize policies on a regular basis
- Transparency – There are two considerations here. While both the buy- and sell-side need to publish quotes and trades, there also needs to be a focus on how this new transparency will change market behaviors and how this new data can be used
- Trading – As well as transparency, changing market structures and mandates mean that traders will need to rethink how products are traded with clients and between institutions. New venues, changing venue classifications and new obligations will require more data and analytics to support the sales and trading desks.
- Research and unbundling – Demands on separating out the cost of research from execution fees will mean changes in the way buy-side firms acquire research from brokers and banks and how they pay for it.
Thomson Reuters: a key partner for the new market model
Thomson Reuters has a number of existing solutions that will be tailored to help the sales and trading operations of sell-side firms comply with the MiFID II obligations summarized above.