FICC impacts for MIFID II

1. • Business is being forced down a path of aligning to an equi6es style of business that does not fit
• Industry poten6ally s6ll believes that this is unworkable and that the “rules” may have to change
• There are no guarantees this will occur
Investor Protec,on Repor,ng and Data Management Market Venues, Instruments and Infrastructure
• Wider scope of MiFID means that investment advice
catch all may see not just FI research and FX research
being captured but other much lower level types of
communica6on such as chat.
• Investment advice poten6ally classified as an
inducement in FX. May have to be “unbundled” and
treated separately.
• Commissions sharing agreements will need to be
expanded to support the split between “advisory” and
execu6on.
• Searching for liquidity becomes an impera6ve and not
just best prac6ce. Proof of best execu6on back to
investor will have to be guaranteed.
• Na6onal Supervisory bodies become en6tled to ban or
limit the sale of certain instrument without prior
approval.
• Massive move away from OTC venues to RMs or MTFs.
• FX Spot is in scope for MIFiD conduct and other conduct
regula6ons despite perceived wisdom.
• Increased price transparency will 6ghten spreads on
customer/corporate business in FX.
• The concept of systema6c internalisers (SIs) is
introduced for non-equity instruments.
• All mul6-lateral trading systems (Regulated Markets or
RMs) , Mul6-lateral Trading Facili6es (MTFs) and
Organised Trading Facili6es (OTFs) are subject to the
same complex pre and post trade transparency
requirements.
• Inducement bans will increase cost to clients.
• IT spend will increase and control cost will increase
challenging the viability of business models.
• Concept of liquid and illiquid markets vary the necessary
responsibili6es for venues and execu6on choice.
• Stringent tes6ng rules and QA to be put in place.
• Publishing of quote data (Axes) a headache for market
markers.
• Concept of liquid and illiquid markets vary the
necessary responsibili6es for repor6ng.
• Client and Instrument Data is specific and needs to be
market wide correct.
• Clock Synchronisa6on for 6me stamping means much
more complex data feeds and data models.
• Transac6on data repor6ng increased to non-equity
products.
• Transac6on data repor6ng increased number of field
required to report from 23 to 65.
• Introduc6on of mandatory LEIs to coincide with EMIR.
• Controls (Name changes, Mergers, Acquisi6ons)
• Trade repor6ng 6melines reduced.
1 Private and Confiden6al