November 13, 2017

The clock is ticking very loudly as the 3 January 2018 MiFID II deadline approaches fast. Not surprisingly, buy and sellside firms are intently focusing on crossing that finishing line but despite all their preparations they may be missing a trick. Instead of leveraging the swathe of technological solutions to simply comply, they should also be utilising them to rethink their business models and better sharpen their competitive edge with new products and services.

Lessons can be found in regulations past. Take Reg NMS and the original MiFID version that made their debut roughly ten years ago. Brokers and banks were forced to undertake deep soul searching about their trading raison d ‘etre. They quickly latched onto the shiny new smart order routing systems to differentiate their offering and prove their execution prowess.

The same is true for insurers who were having to think out of the proverbial box about their modus operandi under Solvency II which came into effect in 2016. State of the art data management processes not only enabled them to hone their reporting outputs but also to transform the information into actionable insights which helped set them apart from their rivals,

Under MiFID II, data management will also be key to fulfil many different obligations particularly on the surveillance front. Capturing and the reporting of transactions will no longer suffice. Next year, market participants will be obliged to conduct real-time monitoring of current trading activity and sequentially reconstruct past trading events. Those that can capture and analyse multiple sources of data in order to more effectively flag suspicious trades will be ahead of the game.

Aquis’ new generation surveillance system allows brokers and bankers to rebuild order books in real time and trigger alerts across asset class and across markets. But it’s not just about the red flags. The partnership with LiquidMetrix analytics also provides valuable insights into trading activity. This will help firms construct meaningful transaction cost analysis and demonstrate they are achieving Best Execution under the more onerous MIFID II’s requirements.

There is a choice to be made. The regulatory compliance tunnel may seem never ending but there is certainly a light at the end of it if firms use the technology to also improve client insights and business practices and produce a better experience for new and old clients. Indeed, for those who are prepared to choose competition over mere compliance, a whole new dawn awaits.

By Lynn Strongin Dodds