20 June 2018
Umesh Patel

Revista Systems

Umesh Patel - Revista Systems

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A place to discuss MiFID

Thinking strategically, what do we do with all this data?

05 December 2017  |  4710 views  |  0

Back in the 1700’s Benjamin Franklin famously once said – ‘A place for everything and everything it’s place’, fast forward to 2017 and the increasingly regulated world that we live in today, this statement couldn’t be more fitting. 

What is the point in recording everything and then 'dumping' it in a box or vault with no strategy about how you might retrieve the said data in case of dispute, or more importantly if requested by the regulators for post-trade scrutiny.

A transaction may have any number of touch-points both pre-trade and post execution and some institutions will even have a middle office function that will manually re-confirm a trade with a counterparty prior to pushing the transaction downstream for settlement. This amount of intervention by numerous parties, spread globally, using a range of communication methods, inevitably means that, quite often, mistakes will occur.

And, every relevant communication linked with a trade must be recorded and stored so that it can be retrieved for regulatory purposes!

Let’s for a moment consider when a transaction isn’t matched with a counterparty in the Back Office, regardless of middle office re-confirmation. The operations person has a number of time consuming and laborious options to consider:

  1. Contact counterparty – find out what the discrepancy is
  2. Call or email sales person – see what the salesperson thinks it wrong
    1. Sales person will contact counterparty to identify the correction
    2. Sales person will ask Traders if discrepancy is an issue
  3. Call or email trader – let them figure out the issue
    1. Trader calls salesperson
    2. Sales person clarifies with counterparty
  4. Trader or sales will clarify with Operations
  5. Trader will potentially be asked to amend transaction 

The options listed above are not exclusive of course; a number of these communications will be needed to clarify each component of the transaction. If the difference on the bookings is material to the transaction, that raises even more issues, such as a prolonged negotiation to negotiate the best solution.

Electrifying transactions from initial enquiry and using a single golden source for transaction data reduces the possibility of errors, but we are all human and mistakes will still happen. As we are all rushing to make sure we are capturing absolutely every word and number spoken, typed or emailed, wouldn’t it make sense to define a clear strategy for how to store and file this data in a fool-proof manner which could be easily retrieved for years to come?

Imagine if you could automatically tag all relevant data, in whatever form it manifests itself – this won’t only keep the governing bodies quiet, but it could also create massive efficiencies when trying to track down where errors might have occurred.

When you think about it, it seems rather strange that we’re not already doing this?



TagsRisk & regulationPost-trade & ops

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job title Head of Product Strategy and Business Development
location London
member since 2017
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Revista Systems provides a fully compliant suite of products for the non-platform trading environment in an ever increasing Regulatory regime. My role is heading up the Business Development efforts...

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