Timestamping Opportunities from the MiFID II - Part III
- Timestamping can provide financial services firms a huge opportunity for optimization and efficiency.
Part 1 and 2 of this article were written by Jock Percy, CEO of Perseus.
There is great opportunity to be had in implementing accurate time stamping, ahead of the new 2018 deadline for MiFID II. But before we can begin to reap the benefits, we must first understand the options for obtaining and integrating accurate time. Picking up where we left off, the next step is determining how to ‘connect’ your time source with your internal trading applications? Again, there are two options:
Application-Level Integration
With the additional year now allotted for implementation, firms may also consider approaching this one application at a time. Taking the extra time to dig into their internal systems to optimize each application, implementing time stamping within each.
The London Summit is coming, get involved!
This may appeal because the task can be broken down into manageable chunks, but there is no guarantee this will meet the microsecond MiFID II requirements as the challenge will still lie in making sure that each of your applications, now with disparate time stamps, are in sync. Given the additional time and internal resources this effort will take, it is costly and may create an end-result that is far from the seamless reporting audit trail mandated by the regulators.
Bloomberg
Network-Level Integration
While tackling the time synchronization challenge at the network level may seem to be the most complex option, network hardware manufacturers have made the integration of time relatively straightforward for firms today. The real challenge lies in choosing a robust time source and integrating it properly with your network environment. As stated in our previous post, GPS time, whether DIY or outsourced, has several major hurdles in the form of cost, maintenance, reporting, and the required expertise.
In Part I in this series we discussed the inner workings of the trade lifecycle. Most large financial services firms employ systems in multiple data centers and send orders to dozens of exchanges around the world, making it critical to have a singular, synchronized source of time across your entire global network.
Beyond the granularity of data sought by ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term regulators, time stamping can provide financial services firms a huge opportunity for optimization and efficiency throughout the trade lifecycle and across their entire global infrastructure. This level of data creates not just a regulatory quick-fix but delivers powerful performance metrics that can allow firms to analyze transactions costs and Slippage Slippage In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price Read this Term across exchanges in different data centers.
Plan for the Worst Case
While seemingly complex, a managed service like PrecisionSync makes it easy for firms to maintain a holistic and exact view of their operations across the globe, providing the detailed data to make smarter and better decisions. For these reasons, the timestamping mandate will create benefits to the industry as a whole that far exceed the original regulatory vision.
Tackling this sooner rather than later can be a quick win in terms of MIFID II preparation, delivering tangible business benefits in the meantime. Free up your resources to focus on the more challenging MIFID preparations and keeping your business running like clockwork.
Part 1 and 2 of this article were written by Jock Percy, CEO of Perseus.
There is great opportunity to be had in implementing accurate time stamping, ahead of the new 2018 deadline for MiFID II. But before we can begin to reap the benefits, we must first understand the options for obtaining and integrating accurate time. Picking up where we left off, the next step is determining how to ‘connect’ your time source with your internal trading applications? Again, there are two options:
Application-Level Integration
With the additional year now allotted for implementation, firms may also consider approaching this one application at a time. Taking the extra time to dig into their internal systems to optimize each application, implementing time stamping within each.
The London Summit is coming, get involved!
This may appeal because the task can be broken down into manageable chunks, but there is no guarantee this will meet the microsecond MiFID II requirements as the challenge will still lie in making sure that each of your applications, now with disparate time stamps, are in sync. Given the additional time and internal resources this effort will take, it is costly and may create an end-result that is far from the seamless reporting audit trail mandated by the regulators.
Bloomberg
Network-Level Integration
While tackling the time synchronization challenge at the network level may seem to be the most complex option, network hardware manufacturers have made the integration of time relatively straightforward for firms today. The real challenge lies in choosing a robust time source and integrating it properly with your network environment. As stated in our previous post, GPS time, whether DIY or outsourced, has several major hurdles in the form of cost, maintenance, reporting, and the required expertise.
In Part I in this series we discussed the inner workings of the trade lifecycle. Most large financial services firms employ systems in multiple data centers and send orders to dozens of exchanges around the world, making it critical to have a singular, synchronized source of time across your entire global network.
Beyond the granularity of data sought by ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term regulators, time stamping can provide financial services firms a huge opportunity for optimization and efficiency throughout the trade lifecycle and across their entire global infrastructure. This level of data creates not just a regulatory quick-fix but delivers powerful performance metrics that can allow firms to analyze transactions costs and Slippage Slippage In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price In financial trading, slippage refers to the difference in price between the price an order was intended or expected to be filled and the actual price an order was filled. Slippage is a very contentious issue among retail traders, which can lead to issues. Many traders view levels of slippage at brokers as a key determinant for their business. For example, in forex trading, if a trader places a trade intending to enter a buy on the EUR/USD at 1.1080, but they only get into the market at a price Read this Term across exchanges in different data centers.
Plan for the Worst Case
While seemingly complex, a managed service like PrecisionSync makes it easy for firms to maintain a holistic and exact view of their operations across the globe, providing the detailed data to make smarter and better decisions. For these reasons, the timestamping mandate will create benefits to the industry as a whole that far exceed the original regulatory vision.
Tackling this sooner rather than later can be a quick win in terms of MIFID II preparation, delivering tangible business benefits in the meantime. Free up your resources to focus on the more challenging MIFID preparations and keeping your business running like clockwork.