support@stormitfinancial.com 
FinTech Trends Newsletter Week 13th November – 17th November 2017
How ready are you for MiFID II with 47 days to go ?
A recent survey found that 90% of buy-side firms are at risk of non-compliance by the MiFID II deadline in January 2018. The Financial Conduct Authority (FCA) published its final policy statement on MiFID II implementation months ago, however many firms are still struggling even though there are 47 days to go until the deadline.A survey, published last month said that 45% of respondents are attempting to implement the requirements with a team of less than 5 people , while another 45% still have not determined how exactly the obligations impact their firms. The FCA has been largely silent on how MiFID II should be interpreted in practice and we expect it will only form a view through thematic work, well after MiFID II has come into force. This has meant that firms have been especially reliant on working closely with trade associations, vendors, MSP’s like Storm IT Financial and each other, to develop common sense practical interpretations of the high-level requirements.
Why MiFID II is a challenging undertaking for financial institutions
Beginning January 3, 2018, investment firms will be required to prove that financial products were acquired at the best possible price. The onus is on the firm to provide substantial proof; inept or incomplete internal structures will not be an acceptable excuse in the event of noncompliance. MiFID II will primarily affect internal procedures and processes such as: IT, technology, supervisory procedures, risk management related to position monitoring and reporting, client classifications, product governance, testing and certification of trading algorithms, best execution, record keeping, call recording and data storage.
MiFID II calls for creating a sophisticated financial and IT data ecosystem, where market participants will be required to capture and submit to regulators all events related to the lifetime of investment decisions. On the flipside, regulators are facing the challenging task of collecting vast amount of information and data, storing it securely and providing efficient access to it, as will buyside firms. The complexity of this undertaking arises not only from the need to process vast amounts of data, but also from the requirement to link events in such a way that a particular market from any moment in history can be recreated easily and efficiently. The Reconstruction of data and events.
What should firms do now ?
Use MiFID II as an opportunity move to a utility-based processing and operational expenditure (OpEx) model. Internally managing trading warehouses with accurate order, trade, and market data information might be an overwhelming task for IT and very costly business operation. It is an especially difficult problem to address for those companies that did not have a reporting obligation under MiFID I and will need to create new data management and reporting infrastructures in a relatively short period of time. In that case, outsourcing compliance reporting functions to an industry utility is an option to consider.
It should be pointed out that if buyside’s have not already done so, firms will need to undertake ‘a gap analysis’ to understand the changes needed and have a clear plan for implementing them ahead of the deadline, including compliant systems for call recording and cataloguing. Although the regulator has clarified several points, the pricing of research is still an area where firms are experiencing difficulties because there are no ‘standardised pricing models’, therefore making it difficult to budget for it. Complying with conversation recording rules should also assist firms with wider compliance. The data and management information available to firms utilising conversation recording systems can also enhance the firms’ governance, another integral part of MiFID II, as well as the necessary evidence that product governance requirements are being met.
MiFID II is being introduced on the 3rd January 2018 will have consequences for the way in which your firm and your IT managed services provider manages its IT systems. Understanding MiFID II is the first step towards putting in place the necessary systems and processes to meet the new requirements. Contact Storm IT Financial for help and guidance about MiFID II and it’s effects on your firm, our MiFID II Call Recording & Data Compliant Solutions and how you can align your IT systems to the directive’s requirements.
Storm IT Financial FinTech News & Trends picks: Week 13th November – 17th November 2017
Microsoft just hit its $20 billion cloud goal, almost a year ahead of schedule
Microsoft’s commercial cloud business just hit $20 billion in annualized revenue, a milestone CEO Satya Nadella set out for the company in 2015:
Boardroom ignorance holding back bank’s tech plans
Bank’s IT departments are unable to pursue innovation with the latest digital technologies because they have lost influence in the boardroom:
https://www.finextra.com/newsarticle/31342/boardroom-ignorance-holding-back-banks-tech-plans
Is there a place for the IoT in Capital Markets?
In Capital Markets Artificial Intelligence (AI) and the Internet of Things (IoT) can be applied to many use cases:
https://www.finextra.com/blogposting/14750/is-there-a-place-for-the-iot-in-capital-markets
Fintech firm buys ex-Investec duo’s Mifid start-up
Regtech firm Visible Alpha has acquired research discovery and manage- ment platform Alpha Exchange to offer end-to-end Mifid II solutions:
10 cloud mistakes that can sink your business
The cloud offers a wide range of tangible business benefits, but don’t let these common blunders cast a shadow on your company’s success:
High Flying Cloud Growth Is Here to Stay, Says CEO
Cloud and big data to be among the fastest growing parts in business:
https://www.barrons.com/articles/talend-high-flying-cloud-growth-is-here-to-stay-says-ceo-1510351625
Schulte Roth & Zabel (SRZ): Bitcoin Derivatives and Expanded CFTC Jurisdiction
Bitcoin derivatives are coming to mainstream exchanges via the CME Group, one of the world’s largest operators of futures exchanges:
https://www.srz.com/resources/bitcoin-derivatives-and-expanded-cftc-jurisdiction.html
Ernst & Young: Hedge fund’s embrace innovation amid industry challenges & increased competition
More than half of managers are innovating to improve their operational efficiency:
RBS set to launch robo-advice proposition
Royal Bank of Scotland is set to roll out its robo-advice proposition:
Small banks oppose U.S. regulator offering olive branch to tech sector
Small banks fight review of a ban that prevents Wal-Mart & Amazon from becoming fully fledged banks:
London extends lead as world’s top finance centre despite Brexit
Survey of the world’s largest financial centres sees the City maintain its top position despite Brexit:
Newsweek in 1995: Why the Internet will Fail.
An infamous Newsweek article dating back to 1995 titled “The Internet? Bah !
