[ F I N A L
T H O U G H T S
|
H AY L E Y
M C D O W E L L ]
Hayley’s
Comment
Has MiFID II been a failure so far?
Senior reporter Hayley McDowell offers her take on the first few
months of life under MiFID II and so far it doesn’t look good.
F
inding tangible evidence of the
effects of MiFID II has so far
been a lot more difficult than I would
have imagined and in the context of
the regulation’s overall mission, the
implementation since 3 January has
so far largely been a failure.
With 3 January supposedly
heralding a ‘new age of transpar-
ency’, I was surprised that firms
operating systematic internalisers
(SIs), periodic auctions or various
other new venues born out of
the new regulatory regime were
rather guarded on the volumes and
activity they had seen since MiFID
II came into force. This, of course,
is with the exception of some
who were confidently trumpeting
records on block trading platforms
or a surge in periodic auction
activity. But in general, it was clear
that a lack of clarity on reporting
requirements had perhaps skewed
82 // TheTrade // Spring 2018
the data for some venues.
For trades executed within pe-
riodic auctions and in some cases
SIs, I was warned that a portion
of the data reported had been pre-
matched, suggesting that over-the
counter (OTC) activity had been
placed within these venues which
are considered to be lit or regu-
lated. The question then remains
how much activity since 3 January
is truly through SIs or periodic
auction? I was forced to take SI
and periodic auction volumes with
a pinch of salt when looking at
the data – it was very possible the
activity had been overstated, and
from an execution performance
standpoint for asset managers,
could very well be meaningless.
Instead of providing clearer
insight into activity on trading
venues, it is now harder to gain a
true picture of the landscape under
the new regime. There are more
venues now, and many are less
transparent than before MiFID II
came into force. Each firm offers
their own round-up or ‘version’ of
activity, alongside vendors who at-
tempt to offer a more holistic view
of the landscape. Still, it remains
unclear.
But before I get ahead of myself
and predict the damning onslaught
of MiFID III, we are only a few
months into the new regime. As
the industry adapts to one of the
biggest regulatory interventions
ever seen, there are bound to be a
few bumps on the road. To prevent
further disruption on this journey,
it will be down to the industry as a
whole to come together and solve
the more immediate implemen-
tation problems - something the
trading community has historically
been rather good at.