Is MiFID II coming into your orbit? Adam De Rose, Eze Software's Associate Director, Product Management, recently participated in a virtual roundtable on the subject with International Securities Services Magazine. Here’s a good primer on the subject; for more, check out the full roundtable by clicking on the PDF link above.
Why has the implementation of MiFID II been postponed by a year?
Quite simply, the size of the effort required to build the infrastructure necessary is gargantuan, and it was very clear that neither the regulators nor the industry participants would be ready by the initial proposed implementation date.
What are the implications of the postponement for institutional investors?
I think institutional investors were as relieved as everyone else. We all appreciate the goals of MiFID II - increased transparency and investor protection - but imposing a tight timeframe on implementation doesn’t afford participants the time they need to think through the complex implications. Implementing MiFID II quickly, but without careful thought and structured change management, could very easily mean that investment managers waste time and money pursuing the wrong solutions, which in the end only undermines the objectives of MiFID II. In short, the postponement allows everyone to do this properly.
ISS: What are the implications for their service providers?
Service providers all have their own roadmaps that extend out over multiple years. With any new regulations, it’s tough to predict what the end result will look like, especially as compromises are made and objectives and deadlines shift. In a world of finite resources, tough decisions sometimes have to be made in order to build solutions for regulation over other client commitments. The postponement has afforded us the time to analyse, plan, design, validate and schedule development in an organised, thoughtful manner, which is exactly how things should be done. In the end, this will result in higher quality products and solutions that help clients streamline their processes being delivered to the market, which is great for us and the industry as a whole.
How will technology firms cope with the surge in IT investment - do they have the capacity?
This is what we call a nice problem to have. Our company is in a mature growth phase. We’ve been steadily increasing our R&D (research and development) budget, spending more than US$65 million on R&D in 2015 alone. We’ve grown headcount to more than 1,000, with 40 percent each in R&D and client services. The ultimate goal of that investment is to deliver world-class industry and product expertise, a consistent experience with project management standards, increase the speed of resolution and finding new ways to engage our client base.
How will firms cope with integration, connectivity and reporting under the new regime?
There’s no doubt about it, this is going to be a huge challenge, but there are many avenues these solutions could take. Interfacing with third parties is a key part of our business. We have an entire layer of technology behind our core products that we call “Data Services” to facilitate these interfaces. This cloud-based tool allows us to build, deploy and update interfaces independent of our product release cycle. We’re also following closely the FIX Trading Community’s development of the FIX Protocol for transaction reporting, and, of course, we have an eye on distributed ledger technology. In the short term, the interfacing will need to be done using current methods of flat file FTPs and APIs.
For more, download the full transcript of the discussion at the link above.