BLOG: 3 Take-aways from Screen Markets, Amsterdam 2014
With the theme "Building the next generation of financial information services", Screen Markets 2014 took place last week in Amsterdam. For those who could not attend, I summarize my three main take-away lessons from the excellent sessions and panels of that day:
- Reference data and market data are strategic challenges, according to Frédéric Bilas, COO of European Fund Administration
- MiFID 2 is "bigger" than EMIR and AIFMD, says the Netherlands regulator AFM
- Large institutions still struggle to figure out where the data acquired flows throughout the organization
Take-away #1: Reference Data and Market Data are strategic challenges
Amongst the highlights was the morning session of Frédéric Bilas, COO of European Fund Administration, who explained that reference data and market data must be considered as a strategic challenge.
He explained the direct consequences of bad data quality for the fund accounting activity, from additional manual work that endangers operations which are already under high timing pressure, to economic penalties in case of NAV calculation errors.
We cannot afford be not 100% compliant. We cannot afford to have average quality.
Mr. Bilas illustrated how EFA has partnered with AIM Software to establish a dedicated data management platform, with a NAV-aware pricing application that has reduced the number of manual suspect prices by 70%, while supporting a new approach reducing delays by 25%.
And at the end of the day, handling good reference data and having good market data, flexible architectures and time-to-market responses can really become a business enabler. Or, at the opposite, if you don’t have that, it can really be a business un-enabler.
So yes, I think you should really consider reference data and market data as a strategic challenge.
Take-away #2: MiFID 2 is "bigger" than EMIR and AIFMD
MiFID 2 is bigger than EMIR and AIFMD, from now until 2017.
MiFID 2 aims to bring light and transparency over the OTC transactions taking place in dark pools through high-frequency trading.
The major impact is that MiFID 2 will oblige firms to report their transactions on all instruments traded in trading venues, and all their derivatives.
Anticipating the comparison with EMIR – which has obliged firms to implement a very similar requirement for reporting all OTC transactions – van Bronswijk explained that MiFID is for risks, not market abuse:
We are interested in who is making the decision, not in the positions like in EMIR.
To facilitate the process, ESMA will share the list of instruments to be reported: The national regulators will collect all reference data from all trading venues, which will be centralized by ESMA. ESMA will then share the list of instruments as well as some additional fields through a central instrument database.
Mr. van Bronswijk illustrated the complex map of data flows to be set up by 2017 involving the financial institutions, the trading venues, the transaction reporting databases and ESMA, collecting the data.
Earlier this year, ESMA published a questionnaire, which has received an overwhelming amount of responses, according to Mr. van Bronswijk. Now, the regulatory technical requirements are being written and will be issued by June 2015.
A lot of work needs to be done until the regulation comes into practice by 2017.
Take-away #3: Firms still struggle to figure out where the data flows
Mr. Bernd Prestel, Head of Market Data Management at UniCredit Corporate Investment Banking, explained the difficulty for market data managers and organizations to efficiently track the flows of data purchased from data vendors within a complex organization and IT systems landscape.
He reported the initiative of UniCredit to list the data flows from data sources to consuming systems, without any other choice than performing manual inventory and 60-90 min interviews, system by system.
He explained as well his next initiative focused on getting a grasp on index data, heavily used by the group to create structured products, and share the difficulty to get access to budget for this kind of initiative.
Author: Olivier Kenji Mathurin is Head of Product Marketing at AIM Software and leads the AIM Research Lab to investigate the industry trends and shape the future of data for the financial institutions.