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MiFID II exposes the need for a regulatory reporting solution

[fa icon="calendar"] 03-Mar-2017 16:54:43 / by David Woolcock

MiFID II exposes Regulatory Reporter software need.jpg

“MiFID II and MiFIR will change the way banks around the world do business —particularly with respect to the scope of data, communications formats and records that must be maintained.” -Bloomberg

 

Responding efficiently to the dramatic changes that MiFID II will bring in January 2018 is key to ensuring your organisation continues to succeed and remains profitable. As a bank or branch/subsidiary regulated by a European regulatory authority and operating in the EU, your bank is subject to MiFID II in general terms. MiFID II covers nearly all instruments (e.g. including Forward FX) except for most Spot FX. The confusion regarding the definition and whether spot FX is in or out has been clarified to some extent and relies mainly on the T+2 (smaller currencies up to T+5) and “physically settled” definitions.

This dramatic increase in reporting requirements is forcing many banks to review their needs for a dedicated regulatory reporting software solution. Here are their 5 key reasons:

1. Multiple data sources.
Regulatory pressure is prompting upgrades to infrastructure. The ‘sticking plaster’ approach to investment can result in disjointed reporting mechanisms that will not be capable of delivering accurate reporting.

2. Activities across multiple asset classes.
There is a clear need to enable front office teams to respond to the need for near real-time reporting alongside answering calls for a permanent reporting solution. Any regulatory reporting software solution needs to maintain a holistic approach by integrating to existing infrastructure including, if required, multiple CRM systems.

3. Best execution.
Organisations need to deliver real-time data and information to provide the ability to prove best execution amongst other regulatory requirements, avoiding drastic changes to existing work flows and infrastructure.

4. Properly tracked trade executions.
Improving quality issues on trade execution will mean more technical challenges in creating a data platform that can collect, review and disseminate accurate trade execution data in a compliant manner. This challenge is especially true with voice trading. Banks need ensure their compliance is across all execution methods alongside creating efficiencies in current workflow practices.

5. Record-keeping.
There are record-keeping requirements in the new regulatory framework, such as making available executed and non-executed records to regulators that go beyond regulatory demands. This needs to be addressed as a high priority development item in 2017 business planning. Issues that go beyond electronic communications will include record-keeping on all phone calls and even face-to-face communications. To keep a reliable, searchable and auditable database of all client interactions will be extremely challenging. However, the siena Regulatory Reporter ensures a seamless solution that interacts with all of your existing technology.

Keep up to date on MiFID II at www.eurobase.com/mifid-ii-software-solution

Topics: Banking, Blog, MiFID, Regulation, Compliance, MiFID II

David Woolcock

Written by David Woolcock

David Woolcock is an independent consultant and Director, Business Consulting at Eurobase. In addition, David is Chair of the Committee for Professionalism at ACI – The Financial Markets Association as well as Vice-Chairing the ACI FX Committee. He is also a member of the Market Practitioners Group for the Bank of International Settlement's FXWG that wrote the FX Global Code.