MiFID II will test firms’ reference data. Are you ready?

​As we’re sure you know, the Markets in Financial Instruments Directive (MiFID) was implemented by European policymakers after the 2008 financial crisis.  The latest update, MiFID II, goes into effect on January 3, 2018, and covers a wide array of regulatory categories.  

What you may not realize (yet) is it will be crucial to have complete and accurate reference data in order to comply. 

Is YOUR reference data ready?  Here are just a few of the new MiFID II regulations that will test your reference data…

​​You must track EVERYTHING about an order

The data required to comply with MiFID II trade reporting includes:

• Order receipt
• Order transmission if order is transmitted & executed
• Execution or cancellation of order on behalf of clients
• Conclusion of trade when dealing on own account
• Storage of relevant internal communication

In addition to price, volume, trading venue, and time of the trade, you must also accurate identify the exact instrument in question.  This means accurate reference data (e.g. ticker symbol, ISIN, SEDOL, etc.) is required from the moment the order originates to cancellation or post-execution for all asset classes.

So for example, you need quality reference data for each of the following to comply with MiFID II:

1. All internal communication relevant to a transaction must also be monitored and archived, even when an order is modified or ultimately cancelled.
2. You must also record and store all voice and text communications relevant to a trade for a minimum of five years.  
3. When requested, a firm must be able to reconstruct all internal communication related to a transaction.
4. After a trade has been executed, there are even more “transaction reporting” requirements where regulators have increased the number of reportable data points from 23 to 65.  

​Conclusion

A lot of money has already been spent by firms getting ready for MiFID II, and more will be spent after it goes into effect on January 3, 2018.  Having complete and accurate reference data is going to be key to comply with MiFID II, so if you haven’t already reviewed your reference data, the clock is ticking.

Learn more about DIH’s reference data solutions.