MiFID II begins 1.3.18
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MiFID II Solutions
Best Execution Reporting and Market Abuse Surveillance
MiFID II will have a significant impact on any financial institution that offers services in the European Union.
Abel Noser is positioned to offer affected buy-side firms, sell-side firms, or venue operators comprehensive best execution data and market surveillance services in light of MiFID II regulations.
What is MiFID II?
MiFID (Markets in Financial Instruments Directive), in place since November, 2007, has been a European financial services regulation meant to assist fair competition in the EU’s markets and ensure a consistent level of consumer protection.
Due to various technological changes, innovations in financial instruments, and increased fragmentation of markets and data (especially since the 2008-9 world financial crisis), a new regulatory package called MiFID II will be implemented on January 3, 2018.
While MiFID applied solely to equity products, MiFID II extends to other asset classes and has more specific and wide-ranging reporting execution and record keeping requirements. For the first time, products like bonds and derivatives that trade over-the-counter will be subject to certain reporting requirements to create price transparency and supervisory oversight.
Comply Using Our TCA and Surveillance Platforms
Our multi-asset, full trade lifecycle data and measurement tools are industry-leading and MiFID II compliance-focused. From pre-trade and real-time best execution review to post-trade analysis and outlier trade surveillance, you'll experience not just the best tools in the business, but a dedicated client services and assistance team who are ready to customize reporting solutions to meet your specific needs. Available offerings include:
- Best execution evidence broken out by implicit costs and explicit commission costs
- Exception-based reports including structured samplings of order outliers
- Attribution report of broker oversight /execution routing decisions
- Control check on time orders resting on trading desk prior to placement to brokers
- Identification of potential market abuse through detailed surveillance reporting
- Full-range reports generator that includes scheduling and bespoke customization
- RTS 28 annual reporting obligation per asset class with hosting option
- PRIIPs Quarterly Summary and supporting transactional based exports
- Historical repository on Abel Noser servers
MiFID II Functions and Benefits
MiFID II mandates an unprecedented level of transparency with the express aim of making European markets more fair, safe and efficient. However, fully understanding and then implementing policies and practices that comply with this new regulatory regime will be challenging for most firms.
Under MiFID II, member states require investment firms to undertake all sufficient steps to obtain, when executing orders, the best possible result for their clients while taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.
Financial services companies and individual professionals are being directed to develop or obtain the technology needed to provide a higher level of detail on where, why and how trades are executed.
Key Compliance Points
Affected Market Segments: Buy Side, Sell Side, Venue Operators
Affected Geographical Locations: MiFID II applies to MiFID firms, i.e. those financial services businesses undertaking MiFID business anywhere in the European Economic Area ('the EEA'). It will also affect all participants in the EU's financial markets, whether they are based in the EU or elsewhere, including providers of asset management and custodial services.
Asset Class Scope: Cash, Derivatives, FX, Fixed Income & Commodities (MiFID applied solely to Equity products; MiFID II extends to All Asset Classes). Products like bonds and derivatives that trade over-the-counter will be subject to certain reporting requirements so to create price transparency and supervisory oversight. Spot FX is not included.
Reference: See Article 27 in MiFID II as it relates to best execution. Fixed format & publicly available reporting obligations for each of the client segments are available. See ESMA Regulatory Technical Standards.
Reporting Obligation: Annual RTS 28 - Affected investment firms are required to report client orders executed on trading venues, systematic internalisers, market makers or other liquidity providers.
Effective Implementation Date: January 3, 2018
PRIIPs - Related Requirements
PRIIPs (Packaged Retail Investment & Insurance Products).
PRIIPs is the first regulation on a European level to deal with pre-contractual information.
Objectives: To improve transparency and increase investor confidence by ensuring comparability between similar products and harmonize the framework of administrative and financial penalties on a Europe‐wide basis.
Products in Scope: Asset managers, UCITS, structured products, guaranteed capital/return products, all investment funds.
Insurance: Unit linked life insurance and certain pension products.
Requirements: Obligation for firms selling investment products to provide investors with Key Information Documents (KIDs) prior to any proposal or contract.
Implementation Date: January 3, 2018 (with 3 year look back requirement)
For More Information
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Client Services: +44 (0) 207 058 2108.
Address: 14 Gray’s Inn Road, London, WC1X 8HN