THE SHEER VOLUME OF TRANSACTIONS AND DATA POINTS TO BE REPORTED WILL CREATE A NEED FOR IMPLEMENTING BEST- AUTOMATED DATA MANAGEMENT PRACTICES ACROSS THE BOARD .
CARSTEN KUNKEL , HEAD OF GLOBAL REGULATORY CENTER OF EXCELLENCE , SIMCORP
considerable data protection concerns .
The industry and regulators are currently working to define how processes such as RFQ and information on price bulletin boards should be treated .
BM : We expect MiFID II to act as an impetus to unlock the value of research , currently tied up in a PDF report . Research must be more closely integrated to the overall investment workflow – including portfolio analysis , execution and reporting .
GK : Research is poised for a big shake-up , with the unbundling of broker research fees . Brokers will need to agree research budgets in advance and investment firms will need to track research commissions at the fund level . Many active fund managers already have in-house research teams , so the net effect is likely to be a reduction in the overall amount of research across the industry .
Best execution will be extended to cover most asset classes including FX , fixed income and OTC products . Investment managers will need execution policies based on asset class and type of service provided , covering factors such as price , transaction costs , speed and likelihood of execution .
Transaction reporting will be extended to cover the new asset classes that are in scope . In addition , the number of fields reported has increased from 23 to 65 , with only 13 of the current reportable fields remaining unchanged . The challenge is that certain firms do not currently capture all of the data that will need to be reported under the rules .
RA : MiFID II will potentially encourage market development similar to equities across asset classes , more competition as a result of stricter best execution policies and more transparency due to new pre- and post-trade reporting requirements . Market makers will face more regulation and increased compliance costs but will have new opportunities across asset classes and trading models . The unbundling of research and trading commissions means we can expect to see a growth of independent houses and changes to the way research is consumed and paid for .
CK : MiFID II extends the scope of the existing reporting regime to all financial instruments traded on regulated markets , MTFs or OTFs and will apply to a greater number of asset classes . It will also triple the number of reportable data fields . For buy-side firms this means making decisions now about which platforms they wish to use
62 | THE TRADE MiFID II HANDBOOK www . thetradenews . com