Trading firms across the board are discovering that operational and regulatory requirements increasingly demand a consistent approach to connectivity, messaging and data management. To industrialize their response to these emerging requirements – to address the challenges in a streamlined, consistent and scalable way – firms need to put in place a centralized connectivity and messaging platform, or hub, that spans the entire breadth of their trading business, across many of the inputs and outputs to the trading technology stack.
This connectivity hub needs to be able to draw upon data from internal and external trading platforms and counterparty systems. It needs to transform data and messages according to configurable business and regulatory rules. Finally, it needs to deliver the data in a consistent format, to both internal and external destinations, including regulators. UL Bridge has been designed to form the backbone of such an enterprise connectivity hub that will enable a firm to meet current MiFID II requirements. It provides the foundation of a platform that can support future growth in response to emerging and ongoing changes in market structure.
Through UL Bridge’s approach to industrializing the trading operations and reporting workflows, firms are able to implement central processes, thereby scaling up the trading technology stack – but crucially these processes are enacted externally to the core trading system. UL Bridge handles enrichments and customization without disrupting trading systems that are historically proprietary, fragile and often temperamental. UL Bridge acts as the conduit from trading systems to external counterparties and venues, as well as between internal applications.
Of course, the ability to handle the FIX messaging standard is a key part of this capability, but UL Bridge has the ability to handle multiple formats and protocols, which is vital for interaction with venues that do not natively speak FIX; venues like MTS, Euronext and the large number of venues based on OMX technology. UL Bridge also has a strong role to play in the context of MiFID II trade reporting. Here, the OMS outputs trade data containing details of trade executions, but this data must be enriched before a trade report is sent to the Approved Publications Arrangement (APA) or other reporting entity, UL Bridge can apply those enrichments in real time, before routing to the APA, using data loaded from other systems or by direct calls to those systems to retrieve data as part of the enrichment process.
UL Bridge won’t solve every MiFID II challenge – but it will solve a lot of them, and make other issues much easier to get to grips with. For example, in the pre-trade process area, UL Bridge provides the connectivity across market access gateways (MAGs) and order entry systems, as well pre-trade risk checks and post-trade drop-copy feeds for regulatory reporting. UL Bridge links to more than 80 MAGs, including connections to SIs like Virtu Financial, Sun Trading, Jump Street and others; APAs, such as TradEcho, Deutsche Boerse and NEX, for trade reporting; and Approved Reporting Mechanisms (ARMs) like UnaVista for transaction reporting.
Having UL Bridge in place makes issues like the recertification of MAGs due to regulatory change – and MiFID II required re-certification of more than 30 exchanges – a relatively straightforward process. These kinds of changes can be handled with a single update to UL Bridge rather than the firm having to make multiple changes across a number of internal systems.
There are many more examples of use cases, MiFID II related and otherwise, that can be facilitated by UL Bridge. A key here is that multiple scenarios, concerning best execution, reference and metadata management, drop copies normalization, reporting and market access, can all be supported through a single deployment of UL Bridge. Each workflow is decoupled from data providers and consumers, and from other work- flows, dramatically reducing the friction that applies when any changes need to be made to IT infrastructure.
Financial services firms will need to move rapidly beyond the basic compliance approaches that many implemented to hit the January 2018 MiFID II deadline. As regulators start to look closer at areas like trade, transaction and best execution reporting, firms will need to demonstrate a high level of industrialization of their processes to satisfy regulators’ demands. Firms seeking to achieve this will need to build out their connectivity and messaging platforms for future functionality, agility and growth. UL Bridge offers the key component in this process, enabling faster time to market, lower total cost of ownership, and greatly increased agility at scale, for MiFID II compliance.
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MiFID II: Industrializing the response using UL Bridge.