Brexit, Data Costs Dominate FIX Conference
The UK’s departure from the European Union and the high cost of market data were the hot discussion topics at the FIX Trading Community conference.
FIX Trading, which provides an open messaging standard for financial markets, held its EMEA trading conference in London today.
Brexit was the overarching concern as the UK is due to leave the European Union in just over two weeks on March 29. It is possible that the UK will crash out of the EU without a transition period in a ‘no deal’ or hard Brexit scenario.
Market participants were concerned about the possible fragmentation of liquidity after Brexit, which will increase the cost of trading. In addition they were worried about the lack of time to change systems given the uncertainty around the future trading relationship, especially around the share trading obligation. MiFID II requires EU securities to be traded on an EU authorised venue or a third country venue that has been granted equivalence.
#Brexit & financial markets: 80% of participants @FIXTrading conf say firms are NOT able to implement changes for hard Brexit day if further clarity is provided now that involves changes. We await ESMA feedback on share trading obligation. #FIXEMEA2019 pic.twitter.com/E7p6HhDhA6
— Pablo Portugal (@PabloPortugal4) March 14, 2019
A poll at the conference found that more than half of firms have put plans in place for a no-deal Brexit, but one fifth have not made any preparations.
52% firms say put plans in place for no-deal Brexit; 28% say ready; 20% not ready #FIXEMEA2019
— Shanny Basar (@shannybasar) March 14, 2019
Yesterday the FCA released a statement clarifying its approach to to MiFID II if the UK leaves the EU without an implementation period. The European Securities and Markets had also set out is position in the event of a hard Brexit earlier this month.
Hearing from Verena Ross @ESMAComms on trading inEurope post #brexit – what do firms need to do & how will regulators respond both sides of the channel #FIXEMEA2019 @FIXTrading pic.twitter.com/9KH9Tlqn1g
— Rebecca Healey (@_RebeccaHealey) March 14, 2019
Both Esma and the FCA have put a temporary permissions regime in place so that market participants do not lose access to UK or European markets, in order to mitigate the risk of financial instability. For example, ESMA has recognised three UK clearers and the UK central securities depositary so that clearing and settlement are not disrupted.
The conference also discussed the consequences of MiFID II coming into force at the start of last year. The regulation said market data should be priced on a reasonable commercial basis but market participants said costs have become too high. In addition, no commercial firm has emerged to produce a consolidated tape across Europe, which adds to the cost of trading, so a public utility run by the regulator may be required.
The consolidated quote system for corporate bonds has raised funds to expand outside the US.
SEC's proposed rule could result in dissemination of incomplete, inaccurate and misleading data.
SEC requires a review of data on non-listed securities before initiating or resuming quotes.
Broker-dealers will be able to meet the new SEC requirements.
Clients can access data from Refinitiv in the Charles River and State Street AlphaSM Data platforms.