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Global Trustee and Fiduciary Services News and Views | MiFID II Special Edition 2016
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Transaction capture and measurement
To achieve compliance with MiFID II’s pre-
trade, at-trade and post-trade requirements,
financial firms will need a comprehensive
transaction management platform. This
requires harmonising data from different
parts of the firm and external sources and
redeploying that data in new ways.
As a result, several opportunities emerge from
the ability to harness transaction data through
complex analysis functions and external sources:
• The new best execution requirements will help
enhance the trade-reconstruction process at
firms — examples of this include the ability to
map and track price runs and chats and keep
the information attached to trades.
• Enhanced reference, counterparty
management and corporate action data will
allow for more sophisticated post-trade and
performance analysis at firms.
• This will only be the beginning of a longer
process of understanding the second order
effect of mandatory venue trading and
transparency on market behaviour.
Data sourcing
MiFID II’s extension of transaction reporting
rules to new asset classes such as fixed
income require vastly expanded information
management capabilities, even beyond those
required under the US Dodd-Frank reforms.
The individual data points required by MiFID II
expand well beyond trade level information,
linking trades with firm and employee-level data
(such as personal details of decision-makers
executing trades at firms). Due to the likely
fragmentation of trading systems across asset
classes through the introduction of new venue
types, the sourcing and construction of trade
identifiers and venue codes will be necessary.
In addition, the introduction of international
securities identification numbers (ISINs) for
individual derivatives also extend the trade data
requirement significantly. Diverse sets of market
data and analytics will be required to support
trade execution benchmarks across equities,
equity derivatives, OTC derivatives, FX and fixed
income instruments.
Benchmarking
and analytics
Pre-trade
transparency
Post-trade
transparency
Best
execution
Trade cost and
liquidity analysis
Research providers,
analytics and risk
RM/MTF
OTF
SI
Benchmarking
and analytics
Best execution
and TCA
Post-trade
processing
Trading