FIX Readies for MiFID II

Terry Flanagan

FIX Trading Community has formed six regulatory subgroups to better enable the financial-markets industry to prepare for Markets in Financial Industry Directive II.

The subgroups are Clock Synchronization, which will address the requirement to sync all industry clocks; Reference Data, which will help with the necessary standardization;  Transparency, which is a high-level aim of MiFID II; Best Execution, which pertains to trade reporting and standardization; Microstructure, which covers algorithmic trading; and Order Data and Record Keeping, which needs to create a standardized audit trail across the trade life cycle.

“Each of these timely subgroups has held its own initial meeting and decided on the specific terms of reference and goals going forward, which will include addressing the relevant regulatory technical standards (RTS) as proposed by the European Securities and Markets Authority (ESMA),” FIX said in a release.

MiFID II, slated for full compliance and enforcement as of January 2017, is intended to increase transparency and boost investor protection. The sweeping European ruleset should result in a stronger and and more stable overall market, but market participants must do more in terms of tightening up their own trading operations.

MiFID II is a broad, high-level ruleset, but at the same time it is voluminous in its detail, and its tentacles extend across asset classes, business units and geographies. “There’s something for everyone,” one industry source recently said.

FIX is attempting to align its preparation for MiFID II with the half-dozen subgroups that will drill down into some of the most pressing specific areas within the regulation.

“FIX Trading Community believes that the application of appropriate standards can help to reduce the cost of regulatory change,” said Matthew Coupe, director at Barclays and co-chair of the FIX EMEA Regulatory Subcommittee. “With the addition of these new subgroups, the Community will directly target specific MiFID II/MiFIR regulatory technical standards and provide tangible guidelines that we believe will assist both the regulators and market participants.”

Market participants and observers may differ on the merits of MiFID II and what exactly needs to be done to meet the standards, but there is consensus that timeline of less than 17 months is very ambitious. By creating the subgroups, FIX is working to ease implementation and enable more effective compliance.

Featured image via carmenmsaa/Dollar Photo Club

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