MiFID II Pre- and Post-Trade Transparency: Is There Light at the End of the Three-Year Tunnel?

by Joséphine de Chazournes, May 22, 2013
Regulation
EMEA

Abstract

Review of the 2007 Markets in Financial Instruments Directive (MiFID) is still under way. Celent does not expect the implementation of MiFID/MiFIR to start before 2016.

In the report MiFID II Pre- and Post-Trade Transparency: Is There Light at the End of the Three-Year Tunnel? Celent focuses on the pre- and post-trade transparency requirements being tackled by the MiFID review. MiFID II is complicated, with a much wider scope and aim than the Financial Transaction Tax; hence the discussions relating to regulation are more contentious and are exacerbated by the economic environment. Should regulators put the MiFID review on hold? Would it be safer and less costly for the markets and investors as a result? Or should regulation be divided in smaller, simpler chunks that are more digestible

“Market participants should focus less on their specific interests and recognize the need to find common ground," says Joséphine de Chazournes, Senior Analyst with Celent’s Securities & Investments Group and author of the report. “Lobbying together at the regulator so the level 1 text is written as an overarching solution suits everybody’s interests.”

This report examines where the European regulation text stands and highlights the outstanding issues, underlining the impact of regulatory uncertainty on market participants. The report also tackles the impact that MiFID regulatory uncertainty has in terms of undesirable opportunity costs. This uncertainty prevents market players from investing in potential solutions, adapting a new framework, and integrating the new structure for their changing business models.”

This 24-page report contains five figures and two tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

2

Where Do MiFIR and MiFID II Stand?

4

 

Timeline

4

 

Pre-Trade Transparency

4

 

Post-Trade Reporting Requirements

6

Outstanding Issues

10

 

Pre-Trade Transparency and Liquidity

10

 

Post-Trade Reporting and Consolidated Tape

13

 

Regulation of Data Resellers

18

 

Impact of the Uncertainty

19

Conclusion

22

Leveraging Celent’s Expertise

23

 

Support for Financial Institutions

23

 

Support for Vendors

23

Related Celent Research

24

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