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Global Trustee and Fiduciary Services News and Views | MiFID II Special Edition 2016
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Validation
For core data engines to produce execution
metrics and further analytics output, the platform
must provide controls for record completeness
and data availability. This includes the ability to
define the minimum realisable attributes by asset
class and link client assets to the appropriate
universe of security data (to establish the position
relative to liquidity and block-size thresholds, for
example). To enable the efficient resolution of
discrepancies in data mapping within a bank or
between two counterparties in the event of a trade
break, it will be necessary to have centralised
exceptions management capabilities for enforcing
workflow dependencies related to the availability
of data. These workflows will typically cut across
many individuals and require dashboards that
ensure an accurate view of application state and
processing metrics. The goal here must be to
automate much of the process, from pre-trade
to the publication of data to regulators (and
generating periodic reports analysing trade
performance).
Analysis
A central theme of MiFID I and MiFID II is to
increase market transparency and ensure
efficient and fair price formation. To achieve the
appropriate level of transaction analysis and
trade reporting, mechanisms that accurately
compare activity to market conditions across
asset classes in the context of the prevailing
market environment will be crucial. To provide the
appropriate level of transparency, any compliant
analysis must also be able to map and correlate
trading strategies, portfolio management goals
and the performance of algorithms affecting trade
execution (algorithm-level information is also
required for the reporting process in some asset
classes). Smart workflows to identify variances
or exceptions in trade activity and comparative
metrics to relevant market peers will allow market
participants to use this transparency to inform
execution decisions.
Reconciliation
MiFID II requires users to comply with a series of
prescriptive industry codes and attributes that
may not initially conform to a firm’s internal
standards. Accordingly, processes for matching
counterparties or clients to a centralised legal
entity master, cross-referencing multi-listed
assets with non-unique ISINs and internal
transactions to trade venue identifiers will
require robust reconciliation capabilities.
Reference data
MiFID II demands that every client (fund, account
or natural person) must be identified in a
standardised format. This amplifies the need for
a truly global and central counterparty database
in the context of counterparty checks, where
KYC information and transaction reporting can
be further refined to more efficiently manage
trading risk profiles and systems.
Data sourcing
Validation
Analysis
Reconciliation
Retention
Distribution
Accurately consolidate data
across platforms, markets
and assets classes.
Ensure accuracy and
completeness of records
across asset classes.
Cross-asset engine
for generation of best
execution metrics.
Facilitate matching and
cross-referencing of
identifiers and codes.
Provide searchable store of
activity to respond to audit
and compliance review.
Automate publications of
results to various regulatory
bodies.