SunGard announced today its strategy to support financial institutions as they prepare for the European Union's Markets in Financial Instruments Directive (MiFID) by highlighting its existing solutions that facilitate aspects of MiFID compliance.
"MiFID represents both a significant challenge and a business opportunity for most participants in the European markets. We have been working with customers over the last year to analyse their needs and help ensure they can turn MiFID compliance to their advantage," said Harold Finders, group chief executive officer of SunGard Europe.
"Most aspects of the Directive are covered by products our customers already use, though like everyone we will be closely reviewing the imminent Level 2 regulations to evaluate whether there are any technology gaps we need to address. Our solutions can help broker dealers become systematic internalisers, investment managers to find best execution, and trading organisations to manage their new data requirements. Today's panel gives market participants the opportunity to debate with leading MiFID authorities, and we are launching a Web page with more information at sungard.com/mifid to maintain an informative dialogue with our customers and partners."
With concentration rules being abolished in those EU markets that had maintained them, MiFID will change the price discovery process, creating a formal category for broker dealers of systematic internaliser. Helping meet the compliance and technology challenges of internal market-making, with the need for multi-directional price communication, is central to SunGard FRONT ARENA's advanced trading facilities, which are already in use by customers in many EU markets. FRONT ARENA's internalisation process works on the "match or move" principle, allowing the automatic external routing of orders when an internalisation opportunity is not possible, or better execution is available elsewhere. FRONT ARENA has been in discussion with its customers for several months about how this internalisation strategy can be extended in a MiFID environment.
MiFID will also result in a significant growth in the volume of information generated from exchanges and systematic internalisers. Market participants will have to maintain much more data long-term for compliance purposes. SunGard's referencePoint cleanses, stores and maintains large volumes of pricing and reference data. On an on-site or outsourced basis, it maps multiple prices and meta-data for a single instrument on to one logical record helping enhance MiFID compliance reporting capabilities.
For investment managers, MiFID will mean using more execution venues and a greater focus on ensuring best execution for their clients. SunGard's Decalog portfolio management system will help investment managers intelligently route trades to the increased number of execution venues MiFID will facilitate. Broker networks to facilitate order flow will become much more prevalent as a result of MiFID, with the SunGard Transaction Network, which connects 170 brokers with 2,000 asset managers, offering cost-effective connectivity.
SunGard's private client investment management solution, APSYS, is in discussions with trade association APCIMS on the best way forward for that sector. SunGard's back-office solutions are planning with their customers how to get ready.
Colm Furlong, equity specialist at SunGard, commented: "The changes MiFID will bring about raise strategic questions for many of our customers – for example does a bank have the potential to become a systematic internaliser, acting like an exchange, in a climate that will see both growth and consolidation as trade volumes rise and trading costs fall. Our role is both to provide the technology required and to understand the business issues in a way that makes us a useful partner to our customers."
SunGard outlined its MiFID positioning at the MiFID roundtable it organised today, chaired by Alberto Giovannini and featuring SunGard's Colm Furlong along with leading MiFID commentators: Bob Fuller, director, IT strategy at DrKW and co-chair of the MiFID IT Joint Working Group; Anthony Belchambers, chief executive officer, Futures and Options Association; Stephen Hanks, economic adviser, Capital Markets and Governance Team, Her Majesty's Treasury; Dermot Turing, partner, Clifford Chance.
A podcast of the discussion will be available at sungard.com/mifid.