New opportunities from real time data legislation

Real time data - more effective pricing and trading

MiFID II legislation will lead to new sources of market data, mainly in non-equities. This creates a major opportunity for leveraging extended transparency to price and trade more effectively.

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REUTERS/Pichi Chuang

OTC market impact

While the market structure of equity markets is unlikely to significantly change, the traditional OTC markets, fixed income, currencies and commodities (FICC) will see a big impact.

Many of the inter-dealer and dealer-to-client platforms will have to formalise their status, either as a Multilateral Trading Facility (MTF) or Organised Trading Facility (OTF) and will have to publish both price and trade data in a consistent manner.

It’s likely to change how the data is presented and increase the overall volume. A good example of this will be the granularity of time-stamp data against order and execution data.

More significant will be the demand for data disaggregation.

New data sources

The key new sources of data will principally come from the direct dealer-to-client activity, as currently private interactions between the counter-parties will need to be published.

For many liquidity providers who actively trade a significant amount off their own books with their clients, it is likely they will need to register as Systematic Internalisers (SI). That means that for every liquid instrument for which a firm is an SI, they will have to publish a quote to the market every time they get asked for a price (and not just back to the requestor).

A significant number of firms currently trade off their own books, so there will be several new SIs who joins the list. For an instrument, it will be relatively easy to check the ESMA website for SIs. Integrating the data may be more complex as SIs will have the choice to publish quotes through a regulated market (RM) (easy), approved publication arrangement (APA) (new but easier), or through proprietary mechanisms (more challenging).

Integrating post-trade data will be a little less challenging as, regardless of the firm’s status, all OTC Trades in MiFID-eligible instruments will have to be published through an APA.

Thomson Reuters: the key market data partner

As with MiFID I, Thomson Reuters is committed to bring together as many of these new data sources as needed - new Systematic Internaliser quotes, OTC trade reports from APAs, new trading venues or just new transparency data from existing markets.

You can access it all via our Elektron Real Time data feeds, or displayed on the Eikon desktop, so you have a comprehensive view on market activity.

Quote and trade data will reflect the regulatory demands, so, for example, expect to see higher resolution time-stamps where appropriate.

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