IBS Journal January 2018
23
A recent survey on the effects of North American buy-side on the operational impact of MiFID II is very enlightening. The poll was hosted by SimCorp in September.
Survey Highlights 58% of respondents confirmed that they will need to comply with MiFID II. Out of this, only 23% feel extremely confident that they have a plan in place, while 77% were either somewhat or not at all confident.
With just 90 days before the deadline, 28% remained unsure if and how their firm will be affected.
Respondents cited the following as the top three operational challenges: 56% - Complying with transaction reporting requirements 50% - Understanding the new market structure 45% - Unbundling of research and execution
“MiFID II is one of the biggest pieces of regulation ever to hit the buy-side industry, so I am not surprised by the extent of uncertainty and concern reflected in the research and poll results,” said Gernot Schmidt, product manager of MiFID II at SimCorp, speaking on a recent webinar.
“The ability to aggregate data across asset classes, geographies, business lines and underlying applications will be essential. One way to do this is by adopting an IBOR architecture, which provides a golden record for positions and transactions, allowing asset managers to address many of the data requirements for MiFID II in one central application. This holistic approach also benefits the Front Office with better data for trading decisions and taking advantage of new trading venues emerging in the wake of the regulation.”
He continued: “It also makes sense that the new transaction reporting requirements rate high on the list of concerns,” Schmidt said. “Daily detailed transaction reporting will be expanded to a much larger set of instrument types, which will call for data gathered from additional source systems to be aggregated. This aspect of MiFID II also provides a compelling case for systems and data integration and increased automation.”
Another recent survey, with similar findings to SimCorp’s poll, is the new report from the Tabb Group: ‘Conquering MiFID II and Beyond in North America: Bridging the Great Data Divide’. The report explored new data requirements and challenges around data lineage, how MiFID II is reshaping the front office and how to achieve alignment and consistency across assets and the trade lifecycle.
Nadeem Syed, CEO at Finastra, says: “It makes sense to team up with a leading specialist provider of post-trade reporting tools to bring seamless reporting to your capital markets clients. It’s no secret that the industry is creaking under the weight of multiple regulations and banks need transparency and
If a data breach occurs, you will need to have a clear plan so that everyone is aware of the escalation process and what to do at every step. You must inform the Information Commissioner’s Office (ICO) that a data breach has taken place within 72 hours of it happening where that breach is likely to result in a risk to the rights and freedoms of individuals
Advise the ICO of what plans you are putting in place to contain the breach You won’t get off twice in a row - identify and inform the ICO of what measures you’re putting in place to make sure it doesn’t happen again. The ICO’s fines will take into account how robust your processes are and how good your forward- planning
looks.You must inform the customer if the data breach has affected their rights. Don’t do an Equifax or a Talk Talk and wait until your customers are running out the door – if you’re unsure the ICO will help you with advice on how to contact them.
Get your communications in good shape. Banks are not famous for their great communications skills. It is not the technology which is usually the problem with data protection – as we saw with the Talk Talk debacle it’s the people in charge who usually cut the corners. MiFID II doubles the reporting realities to provide evaluation and performance reports so that you can keep investors informed. But this means data has to leave the safety of your network.
There are various other solutions. More banks are providing their customers with access via a web portal where they can securely download copies of their own data, the bank maintains control of the data and the conduit up to the point the customer takes possession of the data and the bank makes savings on reduced printing and postage costs.
The main advantage of this method is that it soon becomes a valuable channel of communication for both the bank and the customer as well as keeping data safe. So, as the bank gets used to exchanging information electronically so does the customer. This is a trend that will rapidly change the data protection landscape.
After all – that is the goal all banks have to have – to attract this generation of millennials who will one day be your customers, and who expect two-way, secure conversational digital channels as their main method of communication.
enterprise-wide consistency.” Hugh Daly, CEO of Broadridge’s Message Automation, said, “Banks are taking this regulatory ‘opportunity’ to look at how they can consolidate all of their trade and transaction reporting needs into one solution.”
www.ibsintelligence.com
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