Increased transparency is the focus of MiFID II
The level of information that needs to be shared with regulators or published to the broader market will significantly increase under MiFID II, resulting in increased transparency.
Extending transparency and publishing rules
Greater transparency was the focus of MiFID II/MiFIR even before the the first directive came into force, particularly for equities.
Now that it will be extended into the non-equity space, the European Commission and ESMA have had to factor in more complex rules for publication with a number of waivers and deferrals factored into the Technical Standards.
In general complexity will increase as more asset classes come under the MiFID II umbrella, particularly for banks who have been providing liquidity from their own book on a systematic and substantial basis.
All investments firms, regardless of whether they qualify as an SI or not, will have to publish details of the trade in near real time or with a deferral through an APA.
Deferrals mean that under certain conditions the publication can be delayed for up to two days or potentially longer if mandated by local regulators. However, the rules are not straight forward. You will also need to publish the volumes of transactions undergoing portfolio compression via an APA.
If you provide liquidity to clients from your own book on a frequent, systematic and substantial basis, you will likely qualify as a Systemic Internaliser (SI) and new rules will apply (although some specifics are still being debated.)
You must register on a quarterly basis with local regulators and provide them with specific reference data.
For the rest of that quarter, SIs will need to publish quotes as executable prices across its clients and to the rest of the market. There are waivers and exclusions around the size of the quote that determine whether a quote should be made public. Most of these waivers will be published by ESMA, so it will be vital to integrate this data into your own enterprise platforms.
Helping you report
All investments firms, regardless of whether they qualify as an SI or not, will have an obligation to publish details of trades in near real-time or with a deferral through an APA.
We will provide a complete set of tools and services, including an approved publication arrangement (APA) to enable you to comply with post-trade transparency requirements. This service will deliver post-trade publication for all transparency eligible products, except the equity products already covered by MiFID I.
The APA will be specifically designed to ease the complexities of publication by incorporating deferral rules into the platform to ensure that only the appropriate trades are included.
DataScope Select, the Elektron Real Time data feeds and the Eikon desktop, will also provide data on volumes, LIS and SSTI thresholds, liquidity status and any special delay requirements will be added to the instrument records. This is in addition to the equity related information (average daily turnover and standard market size) which is already provided for MiFID I today.
Our APA service will also enable firms to meet their pre-trade publishing obligations through the same platform – thereby delivering efficiency and scale.
We will provide an SI quote publication capability incorporating data validation, monitoring and alerts and significantly, also manage the complexities of applying the waivers mentioned above, simplifying the entire process of pre-trade transparency.
In addition, we will provide a range of ancillary tools and services including:
- SI Determination analytic tools to measure if a firm qualifies as a Systematic Internaliser
- The required product reference data fields needed to register as a Systematic Internaliser
- For firms wanting to make their own SI calculations or manage waivers, access to transaction counts, volumes, LIS and SSTI thresholds, liquidity status and temporary waiver status on an instrument-by-instrument basis through DataScope Select and our real-time platforms.
We will also provide connectivity from our Enterprise Platform (TREP) into the APA reporting platform to enable customers to seamlessly publish data from internal systems.