19 October 2017
Christian Voigt

Regulation Matters

Christian Voigt - Fidessa

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Nosey neighbours

05 February 2016  |  4187 views  |  0

Is MiFID II really going to force investment firms to pass around huge amounts of personal, identifiable information? Will competitors and counterparties learn way too much about your business? While many of these concerns may be overblown, there are some valid points to consider.

The most obvious one relates to transaction reporting under RTS 22, which will require numerous items such as national IDs, algo IDs, names and birth dates to be submitted to the regulator. Given that firms have to report transactions only from their own perspective, and not that of their counterparties, that data goes no further than the regulator. Things change, however, if a buy-side asks its broker, or a sell-side asks the exchange, to do the transaction reporting for them. In those circumstances, this personal data does have to be exchanged.

A second area of concern is around trading venue record keeping requirements. Under RTS 24, trading venues need to store details of the client of the exchange member and IDs identifying persons or algos responsible for the investment and execution decision. But because the decision IDs refer only to the member itself, it is unlikely that venues will learn of decision IDs beyond those of their own direct members.

Then there are the issues around RTS 6, concerning DEA providers and their requirement to monitor DEA users. Under the new requirements providers will need to monitor trading strategies and single traders of DEA users. While some users might feel slightly uncomfortable flagging separate strategies, they may find some consolation in the fact that a unique and non-descriptive identifier is sufficient and the DEA provider doesn’t have to pass it on to the venue.

While some data sharing is unavoidable, the impact is likely to be more manageable than many fear. So, unless you’re planning to creep out in the dead of night and dig a hole in the back yard, you should be able to keep those nosey neighbours at bay.

TagsTrade executionRisk & regulation

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job title Senior Regulatory Adviser
location London
member since 2015
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I'm a Senior Regulatory Adviser at Fidessa and focus on the growing regulatory and functional requirements for multi-asset automated trading systems, supporting our clients across Europe in meeting th...

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