ESMA Issues Latest Update on IT Infrastructural Agenda Ahead of MiFID II

ESMA's publication of its IT agenda helps address numerous requests from market participants ahead of January.

With less than six months to go until the implementation of MiFID II, ESMA has sent a letter to the European Parliament, Commission, and Council updating them on the delivery of an IT infrastructure. This includes the adoption of a pan-European IT system, enabling a wide range of new reporting and analysis techniques.

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The European Securities and Markets Authority (ESMA) has been gradually addressing the upcoming implementation of MiFID II as well as other elements associated with its passage. Ahead of MiFID II coming into effect in January 2018, ESMA has spelled out no shortage of trading obligations, reporting requirements, and other recalibrations for venues. As such, the regulation is poised to dramatically reshape the landscape across the financial services industry.

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IT development enabling new transparency measures

ESMA’s latest letter outlines key areas of its MiFID IT infrastructure, which will facilitate the reception and publication of reference data and the computation and dissemination of liquidity assessments. This has been a key area of emphasis, which will also include the publication of thresholds utilized for the upcoming transparency and tick size regimes.

The IT infrastructure will also touch on the implementation of a double volume cap mechanism as well as a coordination of trading suspensions. Finally, the IT rollout will enable the exchange of transaction reports. Today’s letter does not fully delve into the entirety of the specifics surrounding the IT infrastructure. Rather, ESMA will soon be publishing more precise market size calculations for MiFID II’s ancillary test, including transitional transparency calculations.

The letter also reflects months of requests from market participants, which have been pushing to expand the project scope to ensure systems that can process and publish information regarding executions. This includes transactions and total turnover executed in the EU for a specific class or financial instruments that is instrumental for European investment firms.

While the European Parliament will be notified of the IT infrastructure’s focus, many features will be tested in H1 2018, ultimately going live by August 2018.

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