Pre- and post-trade transparency
Firms will need to publicly report off-venue Actionable Indications of Interest (AIoIs or firm prices) and executed prices. ‘Off venue’ prices are required to be published through an Approved Publication Arrangement (APA), whereas ‘on venue’ reporting of prices and trades will be the obligation of that trading venue. Bloomberg’s APA expects to receive regulatory approval to meet MiFID II requirements.
ESMA’s final draft Regulatory Technical Standards (RTS) indicate the need to consume a wide array of data to determine MiFID II obligations. For example just with respect to transparency rules, financial products will need to be identified using ISINs and will categorised as liquid or illiquid on instrument by instrument approach (IBIA) or by a classes of financial instrument approach (COFIA). Certain products will be subject to trading obligations. Trade size thresholds (Size Specific to Instrument (SSTI) and Large in Scale (LIS)) will be relevant. Investment firms will need to ensure they register a Legal Entity Identifier (LEI) and will have to determine and potentially register themselves as Systematic Internalisers (SI). Bloomberg will consolidate all sources of such data to assist clients to determine and meet their MiFID II and MiFIR requirements.
Furthermore Bloomberg will consume newly available sources of transparency data and create composites and analytics that clients might use in their investment and execution decision making process.
MiFID II outlines rules for provision and receipt of investment research that should be unbundled from execution. Bloomberg is helping the buy side implement solutions on the provision and receipt of investment research stemming from the implications of MiFID II.
Bloomberg solutions include:
- Granular entitlement systems
- Consumption analytics
- Evaluation and broker vote tools
- Deep research library and research marketplace
Order management systems
In order to operate efficiently in this new environment, firms will have to ensure their workflows are capable of providing the necessary data for all the reporting requirements they will have to fulfill, as well as for surveillance and reconstruction of trades on demand from their regulator.
- The need to provide pre and post-trade transparency reporting
- UTC clock synchronization and time stamping to the millisecond
- Pre- and post-trade compliance checks and surveillance
- Transaction reporting to the regulator
- Best execution reporting
- Record keeping and trade reconstruction
Bloomberg’s Order Management systems, Asset and Investment Manager (AIM) for the buy-side and Trade Order Management Solutions (TOMS) for the sell-side have proven track records of supporting firms to meet regulatory mandates.