Reuters has announced a package of measures aimed at solving the most pressing data problems for clients who will have to comply with Europe's Markets in Financial Instruments Directive (MiFID)from November 1 this year.
Reuters says it will use technology already in use by clients to offer a solution to their MiFID data needs in three key areas: data consolidation, pre-trade and post-trade transparency, and best execution.
Currently trade and price data on individual stocks is concentrated on just one exchange. Following MiFID it will be split between multiple exchanges or other publication venues. Banks need a cost effective means of consolidating data in one place to do this, so Reuters has developed a new Reuters Instrument Code (RIC) ".x.". These RICs will bring together data on all trades around a stock as they happen so that best bid/offer data from all relevant exchanges will be available.
MiFID will also enforce new levels of transparency for investment firms across Europe. That means deals not done on exchanges will have to be published on completion. Firms categorised as a systematic internaliser (SI) in liquid stocks will also have to publish quotes. Reuters says it has adapted technology from the existing product range to meet these challenges via Reuters Trading for Exchanges (RTEx). Additionally, all investment firms in MiFID jurisdictions must publish details of their trading activities in listed shares, even those that take place away from regulated markets. The company says Reuters Trade Publication (RTP) will use the technology behind Reuters Trade Notification Service (RTNS) to fulfil this function.
MiFID requires firms to take steps to achieve the best possible execution of client orders and prove that they have done so. Reuters says it has developed a hosted service called Transaction Cost Analysis (TCA) to do this. Clients can send order and execution data at an interval of their choosing, from daily to monthly, and TCA helps to verify that the execution policy the firm is using achieves the "best possible result" for their customers. For larger firms that want complete ownership over their data, Reuters suggests the Reuters Tick Capture Engine (RTCE), a solution that can collect every single tick of real-time data flowing through their systems. RTCE enables clients to check their own execution quality without the data going outside their systems.
Stephen Wilson, Reuters' global head of exchange traded instruments, says, "MiFID is the biggest regulatory change to hit European markets in the last twenty years. It's a huge challenge for the financial services industry and that's why we are now offering clients the key solutions they need to comply. This is what our clients have asked us for and, as it largely uses existing technology, we can offer it to customers at a cost that will be affordable to even the smallest market participants."