Drowning in MiFID II Data: publication arrangements, consolidation and reporting

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The increased reach of MiFID II compared to MiFID I will pose a significant data collection and analysis challenge, not only to market participants themselves, but also to the regulators. As underlined in the discussions among participants at a half-day conference organized by ECMI on June 28th, firms will need to take adequate and timely steps in order to prepare for MiFID II and comply with its new regulations on transaction reporting and best execution.

On the regulator’s side, it is unclear whether ESMA (the European Securities and Markets Authority) will be able to establish a reliable database for reference. This will be the case for instrument identification, specifically. While the LEIs (Legal Entity Identifier) are necessary for the effective enforcement of the regulations, they certainly complicate matters for firms, especially those with third-country clients. Concerning CTPs (Consolidated Tape Provider), the regulations might be too ambitious, while the market will still provide consolidated data, outside the regulations for CTPs.

Overall, while MiFID II, which will be launched in January 2018, has set out to improve price transparency across all asset classes (not only equity and debt, as was the case for MiFID I), its huge and complex implications invite justified skepticism about firms’ readiness to deliver.