Corporate Advisory

MiFID II – The Data Challenge

 

In raising the bar on market transparency, MiFID II has created a huge data management problem for buy-side and sell-side firms, particularly for investment managers. They need to take in a lot of data from the various venues to provide disclosures to their clients and to their NCAs. Transaction reporting is necessary for all financial instruments on a T+1 basis, but while MiFID I had 20 fields, MiFID II raises the number to 65.

As opposed to a one-dimensional problem, people describe MIFID II’s transparency requirements as multi-dimensional with tentacles that reach into almost every internal system from trade order and execution management (OMS/EMS) to legal entity identifiers (LEIs) and reference databases.

Areas that are most impacted by MiFID II’s data transparency demands are data sourcing, data management, publication and distribution of data, and non-equity instrument data, according to the webinar poll.

The drastic shift in trade reporting requirements stems from the expansion of coverage to non-equity instruments, including fixed income, swaps and derivatives. Another dimension of change is the move to report instruments that are admitted to trade on trading venues as opposed to just the regulated markets.

In the past, the buy side could rely on their sell-side counterparties to report trades to regulators, however the transaction reporting under MiFID II drastically expands the scope and level of detail required from venues, brokers and investment managers.

See full article here