Just as asset managers recover from the herculean effort of preparing for MiFID II, along comes another rule to adhere to. As of this September, uncleared initial margin rules will hit hundreds of asset managers. The objective is ultimately to make over-the-counter (OTC trades) costlier so that more firms turn towards trading on regulated venues.
The overall impact of these rules is likely to be significant – with numerous asset managers set to manage margin with a large number of counterparties at the same time. One emerging trend is for asset managers to turn towards their prime brokers for clearing services. While this is not exactly new, the rules mean those asset managers with portfolios above €750bn in notional, who have never previously had to post margin, will suddenly have to do so. The year after that (September 2020), the notional threshold drops dramatically to $8bn! Continue reading Why uncleared IM rules will spur innovation among asset managers
For many firms, the RTS-28 requirement and the upcoming RTS-27 reports are proving to be a headache. Collecting complex data on this large of a scale and on a detailed level is a complicated effort that requires integrated data science services with a depth of trade data and robust analytics that allow customers to address these regulatory and reporting challenges. Given these exacting standards, cloud-based platforms are ideal in offering the most sophisticated and flexible MiFID II-compliant solutions.
MiFID II continues to present challenging obligations for financial institutions nearly six months since the rule first went into effect. RTS-28, the most recent regulatory hurdle under MiFID II, is meant to ensure transparency and keep firms accountable to best execution policies when transacting on behalf of clients. The reporting standards under RTS-28 require investment firms to disclose their top five execution venues, publish granular details on the execution data obtained at each of these venues, and provide a qualitative review of their best execution policies accompanied by an analysis of how execution is performed. Continue reading Firms Continue to Turn to Cloud-Based Solutions to Comply with MiFID II Rules
Not long ago, all trading was conducted over the phone between clients and their sales dealer at their bank. The advent of electronic trading has led to the decline, but not the end, of voice trading. However, many fear that the demands for greater transparency and data capture under MiFID II will finish the job. MiFID II requires banks to record and report data not only for completed trades, but also for trades that they only quoted but never executed. This is a major change from current regime where clients pick up the phone, request a price and then if nothing is done, they can simply hang up without documenting the conversation.
The challenge facing banks today is that, despite regulatory pressures to push more currency trading on venue, customers still pick up the phone to discuss the best prices and market conditions, or to access liquidity for complex trades. This was supported in a report earlier this year by Greenwich Associates, which stated that voice communications will play a key role in the electronic trading era. Given this, how can banks undergo a seamless shift from how they carry out voice trading today to comply with MiFID II without any disruption to their business? Continue reading Can currency trading still find its voice post-MiFID II?