MiFID II Brings Reporting Challenges

Terry Flanagan

Regulatory compliance is the leading business issue facing asset managers and fund administrators, as they face a slew of new regulations including Dodd-Frank, Emir, MiFID II, AIFMD and Basel III.

The situation is more acute in Europe than the U.S. because most of the rules for Dodd-Frank have already been implemented, whereas rulemaking for EMIR and MiFID II is still in the early stages. European companies face a mountain of regulations to climb over the next several years.

For London Stock Exchange Group’s UnaVista post-trade platform, the priority is getting clients ready for MiFID II.

“There are a number of initiatives we are kicking off shortly to make sure our existing customers can start preparing for this,” said Michael Leach, managing director of business development at LSEG. “It’s transformational for MiFID 1 to MiFID 2 in terms of the number of fields or the assets classes you need to report, and we want to make sure that firms are not caught at the last minute, trying to adhere to a regulation but they’re ready way in advance, so our aim is to have a UAT [user acceptance testing] system in place, 12 months before the regulation goes live.”

The MiFID II regulatory regime is progressing toward its 2017 implementation date, with implications for U.S. companies that do business in Europe. From a reporting standpoint, most firms have been fully engaged with compliance with Dodd-Frank and EMIR, both of which require reporting of OTC transactions to trade repositories, but MiFID II has its own reporting requirements that are at least as comprehensive as those of EMIR /Dodd-Frank.

“The documentation for MiFid II doesn’t even come out until January next year,” Leach said. “We’ve got a good idea of all the fields based on the initial sets of data the fields and the rules are going to be like, and because UnaVista is such an agile technology, we’re going to build something that can be updated as the regulations change prior to going live.”

UnaVista services include the EMIR Trade Repository, MiFID Approved Reporting Mechanism, AIFMD and short-selling reporting services, as well as trade confirmation matching, reconciliation and reference data. Because MiFID II will affect U.S.-based companies that do business in Europe, UnaVista is boosting its presence in the U.S.

“We’ll help to educate firms to be ready for MiFID II whilst we also work with customers to understand what their needs are and how they can leverage a platform like ours,” said Leach. “Global firms with a European focus send their data once to us, and then can manage a number of regulations be that, short selling, transparency directive, EMIR reporting, MiFID reporting, reconciliations etc., so they can do numerous things with one set of data.”

Spearheading the U.S. effort is Robert Grant, who was recently appointed UnaVista’s head of business development, software, for Americas.

“The idea is to take the concerns and uncertainties of the clients and market participants in the US, South America and Canada, and apply the same software and platform functionality that we’ve applied to the clients and the regulations in Europe,” said Grant.

Grant’s appointment comes shortly after UnaVista announced a deal in which it will provide trade repository technology to be locally installed with market infrastructure providers SIX Group. The deal allows clients of SIX to comply with upcoming derivative reporting regimes being implemented by their national competent authorities.

Featured image by jorisvo/Dollar Photo Club

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