MiFID II Transaction Reporting Platforms: What to Look For
Are you getting the most out of your MiFID II transaction reporting platform?
With firms reviewing their outsourced solutions as part of their annual due diligence, many may be asking whether they’re getting real value, service and reliability for the long term when it comes to their MiFID II transaction reporting. But how easy is it really to migrate to another solution?
Below, we’ve pulled together a checklist of attributes you should look for in a potential new platform, including seamless migration, data access and utilisation, and a single, one-stop platform solution.
1. Seamless migration
We often hear that one of the biggest barriers to switching is the complexity of implementing a new data interface for an in-situ t+1 transaction processing system. However, a new data interface is not required and the migration process is usually straightforward.
The firm’s existing data extract can be migrated as-is. This includes migration of existing interfaces from front-office platforms or migrating the in-situ extract currently being sent to another ARM. Or, should your firm wish to improve the quality of the existing extract, additional data validation and enrichment rules can be applied during the migration project to improve any deficiencies that may have been there in the past.
Overall, the entire migration process can be done in as little as five days, depending on the size of your firm and the format of your data, and leading platforms will have a dedicated customer success team to guide you through the entire process - from start to finish.
2. Data access and utilisation
As we’ve covered before, data access and utilisation is becoming ever more important for MiFID firms that want to maximise the use of their data across multiple monitoring and compliance requirements.
Most MIFID firms report vast amounts of t+1 data to National Competent Authorities (NCA) on a daily basis under MiFID II. What many firms may not realise, however, is that this provides an incredibly rich data set that offers a great window into cross-platform and cross-jurisdictional trading activity.
For example, when plugged into business intelligence tools, this data may reveal insights into front and back office operations, trade monitoring, data quality and more – in addition to simply fulfilling MiFID II regulatory requirements. Using the data in this extendable way allows for deeper monitoring in the front office, more efficient compliance reporting in the back office, and stronger audit and control overall.
3. One platform
A single platform that provides consolidated control over your data, with rules, workflow and reporting can enable your firm to meet multiple regulatory requirements.
If firms elect to provide all order traffic from the front office, this can be monitored for post-trade compliance rules and filtered downstream for transaction reporting by the ARM.
By expanding your existing data feed, this means you can use it for multiple different purposes such as post-trade monitoring, compliance workflows and automated auditing to evidence that your firm is meeting the regulatory obligations.
Meanwhile, another benefit of having a reliable one-stop-shop that you can use for multiple purposes is that you can reduce your vendor footprint. At a time when compliance teams are busier than ever and firms are under unprecedented margin pressure, reducing your vendor footprint may be of huge value.
In addition, if the software platform is also authorised by the regulator as a DRSP or an ARM, it means you can combine the downstream machine-to-machine submission to the regulator, with the upstream compliance monitoring.
4. Engage with an ARM
In fact, partnering with a software ARM brings confers a number of benefits. Since the ARM has to pass your reports to the relevant NCA, which will then review the report and pass on any messages, partnering with an ARM directly can streamline this entire process.
Delays are kept to a minimum, and your firm should get support as and when you need it. That means minimal disruption to any T+1 reporting, particularly during busy times and market stress.
Likewise, the joy of partnering with a software company that’s an ARM is that the platform is very dynamic. An inbuilt rules builder means that you can add any rules you wish to embed, while a platform with a flexible rule builder can make the implementation easy, making sure you’re always easily compliant. It’s another facet that may add extra value to your MiFID II transaction reporting platform.
5. Generating value
The regulatory burden is constantly increasing, creating many headwinds for MiFID firms. If these firms streamline multiple compliance and risk operations in a single platform, they can eliminate the need to license multiple, siloed software solutions.
Likewise for broker-dealers and market operators, with high trade volumes, a platform that allows rule-based data management and APIs can allow these firms to streamline data enrichment and feedback loops.
A platform that automates multiple compliance and reconciliation processes, with unrestricted, flexible access to data, generates value.
While many firms may think that their MiFID II transaction reporting is a small part of compliance, or that the barriers to switching are high, this is no longer the case. Not only can you meet more compliance requirements from a single platform, but also gain valuable insights from your data and experience better service. Making the switch has never been easier either.
