Aimed to improve the efficiency and integrity of European capital markets, Markets in Financial Instruments Directive (MiFID II) takes effect on 3 January 2018.
While MiFID II applies directly to investment firms within the European Economic Area (EEA), the scope includes all trading or execution venues conducting business with the EEA.
Successful implementation of a comprehensive data strategy is the key to compliance in this new regulatory environment.
At ICE Data Services, our solutions can help you navigate the unique regulatory complexities, achieve compliance and protect your organization. Robust pricing, analytics and reference data coupled with industry leading technology provides a seamless workflow integration across the front, middle and back office.
MiFID II introduces new transparency requirements for ETFs, certificates, bonds, structured finance products, derivatives and emission allowances. When providing binding quotations for, or transacting in financial instruments, checks will be required to determine whether the instrument is subject to reporting requirements, and, if so, with what immediacy.
We can assist with new security-level Reference Data fields that assess the liquid status of individual securities and their respective waivers for quotes and deferrals for trades. This includes thresholds applicable to firms as well as Systematic Internalisers (LIS - large in scale and SSTI - size specific to instrument).
MiFID II increases the breadth of securities applicable for transaction reporting, expands the number of data fields to report and demands the accuracy of reports.
At ICE Data Services, our MiFID II-specific data solutions for transaction reporting generate eligibility flags and a range of data standards, which include the CFI code (ISO 10962), LEIs and information on underlying instruments.
We aim to provide a complete and reliable MiFID II eligibility flag for transaction reporting, designed to allow you to submit transaction reports. This flag is driven by our extensive and continually maintained reference data.
We dynamically assess the various conditions that underpin MiFID II transaction reporting eligibility, including:
The investor protection framework set out in MiFID II aims to ensure that investment firms act in the best interest of their clients.
The framework will set out more granular requirements that will be captured under the European MiFID II Template (EMT). The EMT will capture information about the costs and charges associated with a product, its target market and whether the product is deemed leveraged by the manufacturer. ICE Data Services will make these elements of the EMT available in its services via a dedicated partner.
Our independent product complexity flag takes into account the latest feedback from industry consultations and regulatory guidance. The product complexity assessment determines financial instruments where no appropriateness analysis of the end investor is required and is presented alongside an explanation of the rationale that was used to derive the setting.
MiFID II introduces mandatory symbology and instrument taxonomy, including:
We can support trading venues and Systematic Internalisers (SIs) with the reference data required in their daily reports to National Competent Authorities detailing all instruments admitted to trading or that were traded, including where orders or quotes were placed through its system.
MiFID II introduces an obligation for firms to undertake all sufficient steps to achieve the best trading result for their clients. This increases the requirements on firms from all ‘reasonable’ steps in MIFID I.
ICE Data Services provide a range of analytics and tools to assist clients in meeting their obligations:
Continuous Evaluated Pricing for Fixed Income and OTC Derivative pricing at the time of transaction to support comparisons between trades and contemporaneous market pricing and valuations.
Our Best Execution service utilising Continuous Evaluated Pricing to provide a trade-by-trade measure of relative execution quality. The score is a percentile rank of trade vs. comparable transactions in the marketplace. The best execution calculator can be used as a pre-trade screen for proposed trade prices or as the basis for post-trade review and exception handling for assessments of scores that fall outside of pre-set thresholds.
Post-trade reporting functionality allowing you to upload your trade blotters to produce comprehensive reports. Additional data can be included in these reports to facilitate the trade analysis process, such as our multi-asset ICE Liquidity Indicators which take into account position size to provide an understanding of potential trading volume capacity, time to liquidate and market impact.
Building on our proven track record of developing industry-leading solutions that help companies adapt to new regulations, we’re using our expertise to create new tools that help you comply with MiFID II, including:
ICE recently hosted an informative discussion and Q&A session with the DSB. The webinar included the following topics:
At a recent MiFID II event hosted by ICE Data Services and The Trade, we asked our team to share their thoughts on how firms can approach MiFID II’s transaction reporting and best execution requirements, and prepare to comply.