RTS-28 and Five of the Biggest Changes for MiFID II Best Execution
Best execution rules are intended to protect investors by ensuring that investment firms seek the best possible result for their clients “taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.”
Best execution has been a component of MiFID, and not a new regulation to any firm – for the US or the European Union. However, MiFID II prompts a few major changes, and casts a wider net across significantly more asset classes, not just equities and equity-like instruments. Five of the biggest high-level changes include:
- Increased obligation from “all reasonable steps” to “all sufficient steps”
- Best execution to be considered for each class of financial instruments, including fixed income, FX and derivatives
- Reporting required on the top 5 execution venues annually
- Introduction of a new type of venue, the Organized Trading Facility (OTF)
- Policy disclosures to be made on the firm's website, and updated annually
Will You be MiFID II Compliant?
Retooling your Order Management System may be one requirement that you won’t be able to overlook if MiFID II applies to your firm.
From decision support, to trade execution, to reporting and the long-term retention of records – the impact on order flows spans the entire trade life cycle.
Watch this short video as Jane Stabile walks through a basic fixed income flow, and highlights just a few of the areas where MiFID II can cause changes for you, and be sure to catch up on the previous videos from this series:
MiFID II Preparation for US Asset Managers: Brace for Impact
The original MiFID (Markets in Financial Instruments Directive) impacted UK and European firms, primarily on the sell side. MiFID II, however, not only impacts the buy side, but it casts a wide net that catches any firm servicing clients in the Eurozone or marketing products there. The effort involved in the new reporting requirements varies with the US Asset Manager’s involvement in the Eurozone, but unless your firm is US domestic only, you are likely to be affected.
Watch the webinar hosted by NSCP, with IMP Consulting and PIMCO.
Contact IMP Consulting to learn more about what buy-side firms will need to do to prepare for MiFID II regulations.
If you’re in compliance, specifically with a Non-EU asset management firm, you may be prepared to sit back and enjoy the show that MiFID II has produced among those firms servicing clients in the European Union. It can be hard enough to keep up with the ever-changing landscape of regulations at home, never mind keep an eye on what goes on across the pond.
However, don’t get too comfortable just yet. With refinements being released as recently as July, MiFID II seems to always have something new in store. Compliance professionals need to understand the changes taking place in the front, middle and back office as well as the potential impact to the systems that support them. To some firms, this has meant strengthening the role of the compliance officer in anticipation of increased regulatory scrutiny.
IMP's Suggested Timeline
If your firm is just getting started, or you’re just figuring out that you may actually be subject to MiFID II, IMP has developed a timeline to help you to quickly identify your next steps, and propel you from today, to January 3, 2018, when MiFID II and MiFIR go in to effect.
If you aren’t on track, or just getting started, contact IMP Consulting to help. IMP provides workflow assessment, coding, testing, and reconciliation, and can help you integrate the appropriate fields into your OMS, FIX transmissions, accounting system or proprietary tools. Request a follow up.
MiFID II Resources
Video: Publish, Report or Perish - Trade Publication vs. Transaction Reporting
Video: Will You Be MiFID II Compliant
Video: Implications for Non-EU Asset Managers
Article: The Rise of MiFID II, Does it Apply to You?
PDF: MiFID II Timeline and Planner for Next Steps
PDF: MiFID II Acronym Guide
Webinar: MiFID II, US Asset Managers Brace for Impact
IMP's Jane Stabile and Jon Gold joined Yanay Lehavi of PIMCO as well as the National Society of Compliance Professionals (NSCP) for a live webinar event to discuss the effects of MiFID II on buy-side asset managers. NSCP has made a recording of the entire presentation and Q&A session available on their website. Click below to get caught up on MiFID II.
This webinar is suited for operations, traders and compliance professionals who are looking for a high-level overview of the key trading requirements, expected impact on order flows, and the implications for US Asset Managers.
IMP Consulting is proud to be a UnaVista Partner!
UnaVista is London Stock Exchange Group’s hosted technology platform, helping firms reduce operational and regulatory risk. The platform assists over 5,000 counterparties reporting in excess of 5 billion transactions annually with 60,000 users in 86 countries.
UnaVista's Partner Programme brings together the world's leading financial services technology and consultancy firms to help the markets become more efficient and reduce operational and regulatory risk. Located in more than 200 cities around the world, UnaVista’s partner ecosystem provides clients with a wide variety of options to comply with regulations across the globe such as MiFID II, Global Derivative Reporting, CAT, MAR and many more.
IMP MiFID II Offerings:
- Search & Selection - if your current vendor can't help you with MiFID, IMP can help you to find a new vendor for upgrades.
- Enrich data in your current OMS.
- Extend data, and help with reporting, including the ability to build reports outside of the system.
- Verify that your firm is MiFID compliant, including data compliance.
- Check compliance rules to check if they meet MiFID requirements.
- Sync compliance library with relevant requirements or trades. If any issues, IMP can help to update the compliance rule library.
For an initial consultation, please fill out the form below to schedule a call with IMP Consulting