Golden Copy: MiFIR's Tallest Orders

Specific challenges for compliance with European market information rules become clearer

Data quality and centralization, along with managing identifiers, must be the core elements as firms get to work on plans to comply with European MiFIR and MiFID II regulation.

In this month's Industry Warehouse column, Eze Software Group executive Erik Schlesinger says that firms trying to develop in-house systems to collect data necessary for compliance with European MiFID II and MiFIR [Markets in Financial Information Directive/Regulation] rules will find doing so a tall order.

You may find that Schlesinger's words ring more true as you read "MiFIR Draws Closer", an in-depth look at the work involved in managing identifiers, centralizing data and raising data quality that needs to be completed by January 2018.

To meet the investor protection requirements included in MiFIR, SIX Financial Information—which, like Eze Software, is a provider offering data management services for compliance—is working to ensure that it has the identifiers necessary for its users to meet those requirements, as senior product manager Jacob Gertel observes in this story.

Dedicated executives such as HSBC's Chris Johnson and Nomura consultant Dan Chambers are pushing for more registration of legal entity identifiers (LEIs) in the year and a half that remains before the MiFIR deadline. "Since firms cannot trade with clients who do not  have LEIs, it needs to be done immediately or it will get to a point where someone is asked to do a trade and it can't happen," according to Chambers. Johnson states that the 450,000 or so LEIs now registered are not enough to ensure MiFIR compliance.

LEIs are not the only relevant identifier to collect, sort and manage, however. They are joined by the ISIN securities identifier, which is useful for ensuring data quality, as David Nowell of the London Stock Exchange Group notes. Working with both LEIs and ISINs will be essential for data management and getting the greatest accuracy and quality possible for MiFIR compliance reporting when that data is being gathered from multiple sources.

In recent online columns (irdonline.com/2458958 and irdonline.com/2458180) touching on last month's North American Financial Information Summit (NAFIS), I considered how ideas about blockchain and data science, as well as the LEI, expressed at the conference could help the industry improve on data management efforts. Another important means of handling data management—data governance programs—is the subject of another story in this issue: "The Human Side Of Data Governance," which reports on ideas on the subject expressed at NAFIS.

While Schlesinger may be right about firms' need for outside support, that doesn't absolve them from developing concrete data governance plans to manage outside services they will use. In their remarks to NAFIS attendees, executives from HSBC and Nomura showed that they recognize this. "Data governance is not a thing you can just buy and implement," said Nomura's Brian Buzzelli. Meanwhile, HSBC's Thomas Mavroudis stressed the need to identify capabilities and create a strategy as a basis for building data governance. "Build an ownership model and embed it within the right organizational structure from the top down," he counseled.

Overall, the story that's being followed in the aforementioned features, which we'll continue to follow, combines all these elements. Firms must plan carefully how to govern and manage data, and get sufficient outside support—and the right kind of outside support—to contend with all the new data that will go into their systems, in order to ensure compliance with MiFIR.

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