Johannes Frey-Skött, VP Apps Engineering at Itiviti, discusses the data collection and retention challenges presented by MiFID II and tackled by Itiviti Analyst – winner of “Best New Technology Product – Regulatory Reporting” at the FOW International Awards 2017.*
MiFID II has far-reaching and multi-faceted implications for European market participants, but if one were to try and pinpoint the regulation’s core challenge, what would that be?
According to Johannes Frey-Skött, the answer to that question is data.
At its core, MiFID II imposes strict requirements when it comes to the sheer volume of data that needs to be collected and stored. That includes reference data from regulators and trading venues, but also all client data and orders, trades and quotes for those classed as high-frequency traders. And in the latter case, the data needs to be accessible for a period of at least 5 years. In addition, firms will now have to populate orders with additional information, pertaining to investment decisions or the execution decisions, which is information that they were not previously required to supply. Add to that the issue of Legal Entity Identifiers (LEIs), which every trading firm must acquire and provide to counterparties, and other requirements relating to pre- and post-trade size limits for different instruments, and you have a veritable data mountain to climb.
The result is a huge regulatory reporting headache that will not only require changes across a firm’s existing technology stack, but will likely necessitate a standalone reporting product, such as Itiviti Analyst, built specifically to handle the onerous data requirements that will become standard practice in the industry come January 2018.
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Risk & Compliance Jim Northey, Senior Vice President Strategy and Research at Itiviti, explores the topic of regulation in a post-globalization environment. In the wake of Brexit and the US election, are we moving away from unified regulatory equivalence to regulatory arbitrage, with single countries taking advantage of regulatory changes to attract market share? February 5, 2018
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