Cian Ó Braonáin and Randall Orbon explore why it is no longer a matter of if—but rather when and how—firms will exit the “business” of trade and transaction reporting
A wave of regulations has hit financial
institutions, and one of the most recent—the Markets
in Financial Instruments Regulation (Mifir) and Directive
(Mifid II)—is driving a fundamental "rethink" of how
firms respond to changing regulations. What started as a
whisper is now reaching a roar in the industry, as a growing
number of participants shift to a different way of thinking. In
short, participants are recognizing that they no longer
can—or should—own and operate the systems
that support trade and transaction reporting. Instead, they are
choosing to access shared systems that address requirements
without draining budgets, straining resources and distracting
from their core revenue-generating businesses.
Drivers of disruption
Driving this strategic rethink are new
requirements that significantly increase the scope of
reportable instruments and reflect the provisions in the market
abuse legislative proposals. Meanwhile, firms face specific
additions to the content of transaction
reporting—including information related to clients,
algorithms, trader IDs and short sales, as well as the price
and negotiated waiver under which the trade took place.
Together, these changes pose significant organizational,
systems and technological challenges—which are merely
the latest in a long and ongoing drumbeat of changing
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