Torstone Technology, the leading provider of post-trade securities and derivatives processing, today announces the introduction of a standalone module to help clients comply with the transaction reporting obligations of the Markets in Financial Instruments Directive (MIFID II) and its accompanying Regulation (MiFIR).
The standalone module, called InfernoRC (Regulatory Compliance) enables clients to comply with the expanded scope and level of prescription of investment firms’ transaction reporting obligations under MiFIR, including the much wider range of financial instruments and disclosure of additional mandatory data which the regulation requires.
In addition to sourcing and validating data, InfernoRC accounts for data security, data privacy and data quality requirements on the information collated from across a multitude of disparate systems.
Brian Collings, CEO, Torstone Technology said: “General consensus amongst market participants, including Torstone's clients, is that the back office function is the most appropriate department to handle compliance with the data requirements of MIFIR. Using our long standing expertise in this space, we have developed a stand-alone MiFIR module to satisfy the new reporting requirements.”
Despite the delay to the implementation of MiFIR, it is widely expected that financial penalties for non-compliance or misreporting under MiFIR will start immediately after the go live date, expected in early 2018. As a result, Torstone is working with clients and regulators to deploy the product well in advance of this, giving clients plenty of time to implement and fully test their solution ahead of the deadline.
The most significant changes to the transaction reporting requirements in MIFIR are:
• Obligation to supply 'natural person identifiers': this will require the supply of an ID code for the decision maker behind a deal and if different, the ID of the individual that actually executed the trade and/or, if the trade was generated or executed by a computer algorithm, the relevant identifier code for the relevant algorithm(s). Investment firms will also be required to report client ID codes by contacting individual clients for either a national passport number or national identity card, ensuring that this information is reflected across the entire order transmittal and execution chain.
• Instrument classification data, while already a requirement of MiFID I, will expand in scope to include all asset classes. This can be made all the more complex if firms are using multiple order management systems for each asset class that they trade. However, so as not to increase the operational burden, InfernoRC will direct trade flow from different systems to the consolidated module which will facilitate this transaction reporting. Furthermore, transaction reports for physical short sales of EU listed shares and EU sovereign debt instruments will need to include a short sale flag, also a function that will need to be performed by the front office.
Torstone’s InfernoRC will provide connectivity to enable transaction reporting to multiple Approved Reporting Mechanisms (ARMs),