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Moving from an internal view to an industry view for MiFID II

Martijn Groot

An annual forum for CDOs and senior data professionals from top banks and asset managers, FIMA aims to ‘walk the tight rope between new tech opportunities and regulatory risk’.

Through interactive discussion and debate, vendors and financial services providers discover practical solutions to ensure their data strategy aligns with business goals and adds value to the business.

What was on the agenda of FIMA Europe 2016?

  • Critical updates from the regulators – main expectations to prioritise and plan investment
  • Planning for MiFID II
  • Moving traditional businesses into the digital world
  • Utilities are the only way forward for financial data – For & Against
  • The future implications of AI, machine learning and robotics for financial information management

Alveo’s Martijn Groot took part in a panel discussion on the industry’s most wide-reaching regulation – MiFID II, and it threw up several key conversation points.

Planning your data strategy to be ready for the January 2018 MiFID II requirements

Alongside Ayaz Haji, MiFID 2 Head of Technical Architecture and Data Strategy at Goldman Sachs, and Hubert Deroubaix, Business Development Director, Regulatory Products at ICE Data Services, Martijn explored the breadth of the regulation with a focus on how Alveo clients are reacting and adapting to the challenges it poses.

The difficulties that financial services firms face can be said to be matched or even exceeded by those of the regulators themselves, to create harmonisation across the industry with individual regulations that slot together to produce a better result for all parties.

MiFID II provides the opportunity for companies to get their master data and data model integration in order, with more data being opened up to wider use, with potential use cases for valuation and market risk – inclusive of FRTB.

We are seeing a constantly changing environment, with the requirement for pre and post trade transparency, data harmonisation, and the internal cross referencing challenges for legacy systems.

Workflows are having to adapt, with tighter time constraints and a need for a lot of data to exits firms as well as circulate within.

As alluded to by Ayaz Haji, this entails that any attempt at standardisation is useful, with internal strategies needing to align with the industry. In many ways regulation is seen as an important yardstick toward which firms can aim.

“The risks that companies would be running without this data being controlled, from a governance perspective… [are considerable].”

The increased demands provide an opportunity not only for firms, but for the industry as a whole to utilise standards to alleviate the regulatory burden.

The implications of the “momentous shift” of BCBS 239 essentially “moved the market”.

The panel agreed, from a data professional’s perspective, that the current regulatory landscape has a lot of positive aspects that they don’t want to see leave, justifying the business case of data importance.

The specificity behind MiFID II in particular is seen as very useful, and it is this intrinsic detail, such as in the LEI requirements, which many in the industry want to see in every regulation. It also clearly encourages institutions to build common infrastructure to deal with all regulations, which again is seen as a strong step forward.

“MiFID II can be set apart from other regulations based on its scope. It’s not just about an internal view, it’s about the industry view of data.”

It’s no longer just about the internal view of data, it’s about the industry view.

The principles of BCBS 239 set out a great framework, but, as principles they are very high level. In contrast, MiFID II is incredibly prescriptive, referencing specific markets, products and functions. Within this, institutions have the opportunity to apply standards that start to interact with the way the industry works day to day.

Read more on the emerging demands of MiFID II in Director – Data Services, Boyke Baboelal’s latest blog.