MiFID II: The Buy-Side Transparency Challenge


MiFID II is going to boost transparency in financial markets and improve and broaden best execution standards for the buy side, but not everyone is prepared to handle all the data. While MIFID II standards go into force as of January 3, 2017, buy side market participants have suggested there is not enough time to prepare for the technology changes.



MiFID II is going to boost transparency in financial markets and improve and broaden best execution standards for the buy side, but not everyone is prepared to handle all the data.

Last month, the European Securities and Markets Authority (ESMA) published the final regulatory technical standards for MiFID II/MiFIRdetailing its vision for how the regulation should be implemented.

While MIFID II standards go into force as of January 3, 2017, buy side market participants have suggested there is not enough time to prepare for the technology changes.

A group representing UK asset managers is asking for a delay in the implementation of MiFID II rules, suggesting they need more time to prepare for sweeping changes to execution, unbundling of research payments, limits on dark pool trading and transaction cost analysis. Overall, MiFID II will establish pre-and post-trade transparency rules for equity-like instruments, bonds, derivatives, structure finance products and emission allowances.

One controversial issue of concern to the buy side is that MiFID II creates a transparency regime that will require fixed income trading venues to publish quotations, based on the liquidity characteristics of the bonds. ESMA is also planning to bring the majority of non-equity products into a regulatory regime by moving a significant portion of OTC products onto regulated platforms and require trade reporting.

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