With the EU’s Markets in Financial Instruments Directive II (MiFID II) about to come into force in January 2018, capital markets participants are now urgently taking steps to digest the requirements and meet this latest regulatory challenge.
MiFID II is poised to disrupt the status quo in financial services, demanding firms make major changes to the way they operate, as well as the technology and connectivity infrastructures they depend upon.
Under MiFID II, firms face a significant obligation to collect, store and - when required - present regulators with all the data pertaining to how a given trade was executed. For instance, MiFID II compliance will require highly granular time-stamping of order and transaction data, which firms need to put in place using sophisticated monitoring systems.
To help financial services firms meet these challenges, new tools and value-added services are now rushing to market. “At Interxion, we’re dedicated to facilitating this process,” says Bill Fenick, Strategy and Market Director for Financial Services at Interxion. “We’re fully behind our close-knit financial services community of more than 200 capital market participants as it develops and shares new capabilities. We’re seeing customers ask for various auxiliary services as they begin to feel the heat on MiFID II, such as time-stamping and additional connectivity to further data sources”.
Inside Interxion’s data centres, firms can easily buy and sell new MiFID II capabilities as part of a closely connected community of exchanges, ISVs and service providers. Interxion also recently welcomed an innovative new partner into this community of interest. The US-based Securities Technology Analysis Center (STAC) facilitates an industry consortium that develops benchmark standards for the myriad technologies used in the trading process, including time synchronisation.
Trading firms and vendors from around the world have been working with STAC on standards and software that enables trading organisations to demonstrate to regulators that their time synchronisation, time-stamping and event capture solutions comply with MiFID II’s time rules (RTS 25). Without such standards, regulators would need to involve third-party experts at each firm’s expense to conduct time-consuming investigations, presenting firms with significant costs and the risk that they will be found non-compliant.
“To better support firms that want to use industry standards to demonstrate RTS 25 compliance, STAC decided to establish a footprint in Europe,” comments STAC Director, Peter Lankford. “We chose Interxion’s London data centre campus as our European testing site due to its flexibility and large concentration of financial customers”.
Live now, STAC’s test lab in Interxion’s London campus is currently conducting research on vendor equipment, such as clocks and capture devices. With advanced equipment for testing such systems now in place, STAC’s latest test site will bring financial firms information that’s critical to making the right choices on the road to MiFID II compliance.