Latest Blog Posts

With the Winds of Change Blowing, Are You Ready to Adapt to the New Research Unbundling Environment?

Sean Steinmetz, Bloomberg Tradebook

May 28, 2015

There has been an age-old practice of allowing the cost of research to be bundled into dealing commission, thereby passing on the cost to underlying investors. This has provided start-up and developing asset managers and hedge funds with the flexibility to solicit a variety of opinions and trade ideas. This is how things have always been done, so why complicate things with change? No one likes change. Yet, that is exactly what European regulators are working on—changing this long-established practice. read more

Engagement between the regulator and the regulated is vital in the lead up to MiFID II

Robert Powell, Etrali Trading Solutions

May 27, 2015
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A number of question marks remain surrounding the detail and full impact of MiFID II. These are causing significant anxiety amongst the trading community as we edge further towards the late 2016 implementation date. The practical reality of the post-MiFID trading environment, and the expected higher trading costs associated with it, remain somewhat of a grey area. Nonetheless, with firms not expected to have implemented the new measures until late 2016, there is still time for these concerns to be addressed. read more

Data integrity: in the spotlight

Mark Brennan, ITRS Group

May 21, 2015
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What are the markets drivers putting pressure on data integrity? Market drivers for monitoring data integrity stem from the large-scale regulatory change sweeping the industry. Back at the G20 summit in Pittsburgh in September 2009, the world’s leading countries agreed that there needed to be more transparency and risk mitigation for the global derivatives market, in the form of organized clearing, reporting and trading. These principles were later enshrined in Dodd-Frank’s Title VII, and are at varying rates of progress in the EU through EMIR and MiFID II regulatory initiatives. read more

MiFID II deadlines under further pressure

Christian Voigt, Fidessa

May 14, 2015

The European Commission (EC) and ESMA have agreed on an improved process to draft the Level 2 texts for MiFID II. On the back of those discussions, ESMA asked for a 3-month extension on their own deadline to submit draft technical standards and the EC granted it. While the next Level 2 drafts will now not be published until September 2015, the benefit is that further changes are less likely. It is certainly better for everyone that ESMA and the EC avoid a game of legal ping pong. However, ESMA’s statement that this will not delay the implementation time seems to me rather bold. read more

Having your regulatory cake and eating it

Steve Grob, Fidessa

May 14, 2015

This morning I read with interest a colleague’s blog post on the delay to the publication of the ESMA technical standards from July back to September. Whilst I appreciate that these things are complicated, it seems hard to understand how this won’t delay the implementation date without potentially increasing the very risks the regulations are trying to prevent. Building software and systems properly isn’t just a question of resource; it’s just as much about process. Here at Fidessa Towers, for example, we work on a quarterly release cycle. read more

Spoofing and the Flash Crash – Six Things You Need to Know

Ivy Schmerken, FlexTrade

May 12, 2015
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Charges against a UK futures trader accused of manipulating the U.S. futures markets has ignited debate on whether “spoofing”  was a contributing factor in the 2010 Flash Crash in U.S. stocks. In the entertainment field, you often watch a spoof on Saturday Night Live, but the consequences are usually innocuous.  In computerized financial markets, spoofing generates a lot of “noise” in the market, and can be far from innocuous. It’s meant to trick market participants into trading based on quotes that, while actionable, are designed to move the market in a direction favorable to the spoofer. read more

NYSE, BATS and FINRA – Time to Join Nasdaq’s Pilot

Gary Stone, Bloomberg Trading Solutions

May 11, 2015
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On Monday, February 2, Nasdaq, on its “classic” or NSDQ exchange, unilaterally lowered access fees on 14 stocks in a test of US market structure. The 14 stocks are comprised of 7 Nasdaq-listed and 7 NYSE-listed relatively high ADV stocks. The results are rather conclusive: • Nasdaq has lost market share in the continuous market trading in every stock in their Pilot (Figure 1, column 13 “continuous mkt share – ex-Auction Volume”); In our opinion, the implication is clear: • The SEC, by capping take fees at 30 mils in 2004 under Regulation NMS Rule 610, created a “Prisoner’s Dilemma” that only it can solve. read more

MiFID II set to cast its net worldwide

Christian Voigt, Fidessa

May 08, 2015

The current MiFID II draft suggests that trading venues have to fulfil the transaction reporting for non-EEA exchange members. While it is understandable that regulators want to ensure complete records of all trading activity within Europe, the operational burden could be far-reaching. Currently, exchanges rely largely on trading interfaces to collect information from their members, but these were never designed for transaction reporting. Most importantly, some of the required information is not available when the order is submitted to the exchange. read more