RTS 28 top five reporting requirements on venues and execution counterparties .
We have made some very good progress with this project where we are now on the home run for all the financial instruments we trade , both from a qualitative and quantitative perspective . As this is the first time for everybody , reporting on 2017 data , there will no doubt be some teething problems and also a potential for varying interpretations of the obligations . One of the most confusing points appears to be the identification of the trading venue and when that is a broker or an actual venue .
Trade reporting
For our trade reporting we are using Trax which has been a real win for us as it covers our trade reporting obligations across all asset classes . A very solid choice if the first few weeks are anything to go by .
There is an increasing focus within the asset management industry over both explicit and implicit costs and charges across all business units and this is also a well-known focus for the FCA this year , who want to ensure any opaque charges become much more transparent . It does feel like there is now going to be more of a focus around commission rates . There are many different ways to potentially source liquidity across the marketplace , whether it be Lit markets , dark pools , systematic internalisers , block search and discovery etc . and some strategies inevitably attract higher costs than others . Many asset managers pay blended commission rates across all execution services and some are more granular and break down different rates for different services . It will be interesting to see how these explicit charges develop during this year and beyond as I am not sure the long-term answer is a race to zero given all the different options and potential outcomes we have in order to be able to achieve best execution for our clients . We must not lose sight of the possibility of having to pay one basis point more in order to save multiples of that in implicit costs . One of the biggest challenges the buy-side trader faces is trying to keep market impact to a minimum ; an implicit cost that can easily reach multiples of explicit charges . With access to liquidity in equity markets being so fragmented it is essential that the buy-side trader has the ability to assess which are most suited for their best execution process and then also have the ability to engage with that venue .
MiFID II
MiFID I was largely about equities and MiFID II largely about trying to bring transparency around many other financial instruments . Honouring our fixed income obligations were by far the most challenging for us and no doubt most of our peers too . Our head of fixed income trading and the MiFID II project team have done a fantastic job in bringing our fixed income trading activity in to the MiFID II world . Bringing financial instruments into new venue trading environments has been a very big data and connectivity challenge , one I have to say was looking pretty daunting this time last year but we have managed to complete the challenge and I have no doubt this hard work will pay off in the form of a more efficient investment environment for all investors .
18 www . buysideintel . com Spring 2018