Client reference data for products and instruments

A broadening requirement for reference data

MiFID II increases the need for accurate and comprehensive reference data on the products and instruments you are allowed to sell – as well as on the clients who buy them.

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REUTERS/Bazuki Muhammad

More reference data required all around

With MiFID II you simply need to know more: about what instruments you’re allowed to trade; about the specific products within those instruments; about the rules that apply; and, finally, about the parties who may buy them.

Understanding what products fall under the scope of MiFID II is complex since the key pillars of the legislation apply to different groups of products and instruments.

The first order of business for many firms will be to see what products are considered financial instruments, and what MiFID II principles then apply.

Meeting new transparency and trading reporting rules

Pre- and post-trade transparency has specific qualifying criteria: the financial instrument or product group must have previously traded on a trading venue. This scope will increase over time, with specific instrument threshold data (pre- and post-trade LIS and SSTI) and liquidity status needed to understand how waivers or delays can be applied to individual quotes and trades. This data will be generated by ESMA as part of its on-going operational responsibilities, but it also needs to be integrated into the firm’s enterprise.

Transaction reporting will be more difficult because the rules are less straightforward. Any financial instrument which has traded or has been admitted to a trading will be simpler to determine.

It gets more complex when this extends to instruments that have simply made a request for admission to trade on a trading venue or when the financial instrument has an underlying instrument or basket/index of instruments traded on a trading venue.

Understanding which shares or derivatives fall under the mandate to trade on a trading venue is another aspect that will need to be flagged and enforced. While the scope for equities will slowly increase as more shares get brought to market, the derivative scope will change significantly as ESMA brings more and more derivative groups into scope using successive Regulatory Technical Standards.

Client data will have new requirements from MiFID II as well. MiFIR already makes a specific requirement to use Legal Entity Identifiers (LEI) to identify any EU company (Financial and Non-Financial) trading financial instruments. MiFID II goes beyond that, demanding a much better understanding of clients, their structure and the suitability and appropriateness of products they are offered.

Market-leading reference data

For product and instrument reference data:

We will actively monitor all these data points and extend existing product content to ensure this crucial data is available in its real-time and reference data solutions.

For many firms, we already provide the backbone for reference data, so accessing these new data points will be seamless and straight-forward to integrate.

DataScope Select continues to be the primary service for instrument reference and pricing data. Much of this information will also be included within the Elektron Real Time data feeds, and available on Eikon.

For client reference data:

Thomson Reuters Entity Risk identifies and verifies client identity, providing the most complete and comprehensive data source available for understanding complex corporate structures.

With over 100 legal entity attributes, including LEI and organization type, this data can be delivered through multiple channels including DataScope, web service APIs or FTP servers.

Thomson Reuters Fundamentals data builds on client identification by providing access to fundamental performance data, giving insight into over 88,000 companies in over 120 countries globally.