We had a fun meeting of the financial services club this week, looking at the implications of MiFID, the Markets in Financial Instruments Directive, and the outlook for MiFID II, or MiFID2 if you prefer.
I’ve referenced the revision of MiFID before and included a great white paper by Philippe Guillot of CA Cheuvreux for reference.
Equally, we now see more developments taking place, including investigations by CESR – the Committee of European Securities Regulators – that will conclude at the end of May, and covers 107 questions across a broad spectrum of issues:
Investor protection and intermediaries
- Telephone recording
- Execution data quality
- Instrument complexity
- Personal recommendations
- Supervision of tied agents
- Options and discretions
- Pre-trade regime for RM/MTFs
- Definition of Sis
- Post trade transparency regime
- Extended scope of transparency
- Regulatory framework for consolidation and cost of market data
- RM and MTF alignment and crossing networks
- Eliminating options and discretions
- New trading capacity (riskless principal)
- Counterparty and client identifiers
- User guidelines (how to fill in the reports)
There are also bigger issues, such as the post-trade clearing environment and its challenges. For some time, there has been reference to a Clearing & Settlement Directive for example, and MiFID2 is meant to address this.
It is also meant to address the fragmentation of trade reporting and the price tape.
It may also pop a whack at ‘dark pools’ and high frequency trading.
For all we know, it could even re-regulate the new electronic trading platforms – most of which are yet to wipe their face with a profit – and make them completely unworkable by introducing reporting rules and overheads that are as onerous as the ones that traditional stock exchanges have to work with.
Now, to be clear, we don’t know what’s in MiFID2 right now – we won’t really know until 2012 or after when the new regulation is drafted – but there are some pretty good guesses and so, in order to find out what those guess would be, we gathered an expert panel on star wars day (May 4th):
- Andrew Allwright, Business Manager, MiFID Solutions, Thomson Reuters
- Andrew Bowley, Head of Electronic Trading Product Management, Nomura
- Hirander Misra, CEO of Algo Technologies Ltd and former COO, Chi-X
- Philippe Guillot, Global Head of Trading and Execution, CA Cheuvreux
- Willy Van Stappen, COO, Equiduct
to debate and discuss. Here is the outline of the evening:
For full access to this knowledge, join the Financial Services Club.
Meanwhile, there are some rapid fire changes ahead with key dates this year including:
The FSA formed a MiFID working party and trade associations, such as FIX Protocol, ISITC, FISD and RDUG all have meetings looking at the implications of MiFID 2.
CESR hearings on key questions and issues around MiFID2 and closure of consultation at end of month.
The MiFID JWG, Joint Working Group, reforms on 9th June in a meeting at Thomson Reuters.
Can’t wait to be there ...