On 2 March 2017, NEX Abide Financial hosted a breakfast briefing at Hotel Napoleon in Paris. The session opened with an introduction from Olivier Halimi and Olivier Birgel, both Business Development Managers at Abide, on the history of the company which was established in 2010 specifically to address trade and transaction reporting challenges presented by regulatory change arising from MiFID, EMIR, SFTR, and other international regimes.
With over two billion transactions reported to date, Abide processes c. 20% of all MiFID reportable trades and is among the two largest EMIR reporting service providers. With a combination of industry knowledge, specialist consultancy and cutting edge technology Abide currently services more than 120 banks, brokerage houses, hedge funds and asset managers.
Mark Kelly, Director of Professional Services, followed with a presentation on the complexities faced by different types of reporting firms under MiFID II, including what is in scope for each type of investment firm, RTO considerations (there are no positives) and INTC reporting. He then explained the ISIN requirement and the difficulty in collecting personal details from end-users. Interestingly, there has been a different reaction from each European country towards personal data collection, with France preferring CONCAT.
Data security was cited as a big concern to those in attendance; it was agreed that reporting via an Approved Reporting Mechanism (ARM) is the best route forward under MiFID II as ARMs have a legal obligation to secure all data. The question was asked, how does the European Union’s proposed legislation for 2018 on data protection fit in with MiFID II? In response, it was advised that firms pass their data through regulated entities, such as ARMs, which are secure anyway.
Further advantages or reporting via an ARM is that the data is validated ensuring you do not expose any issues directly to the regulator before they are resolved, and although reporting firms are liable for their own reporting, ARMs, unlike with MiFID, take on some of the responsibility under MiFID II.
Another pain point that arose was that asset managers are going to have to report under MiFID II as there is no exemption from reporting, no matter who has reported a trade against a firm. There is no easy route to delegation. To make matters worse it was claimed that volumes will be much higher for asset managers than initially expected. This is because under MiFID II counterparties are more likely to report against you at fill level rather than order level, obliging you to report in the same manner.
The debate around becoming a systematic internaliser (SI) reared its ugly head. It was decided that it is not an easy viable option for most firms. Despite this, and there being no SI obligation for six months, firms are likely to volunteer so firms can trade against them. It was pointed out that some sell side firms already have a lot of the infrastructure in place so it is not that complicated for them, however they will still need to facilitate reference data.
Lastly, concerns around Brexit were raised, leaving the group to speculate that there would be British equivalents of the European regulations. The Abide team reassured attendees that Abide will domicile in Europe to continue its European focus.
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