The smartest financial firms are realising that MiFID II regulation is not just another regulatory burden. In fact, it’s a licence to remodel their businesses and grab market share. In this article, Fergus Keenan, Head of Project Execution at Adaptive, examines where the opportunities lie, and how the latest IT advances can help firms to exploit them.
Pundits have expended thousands of paragraphs on the challenges of MiFID II, from how to interpret the rules to how much it’s going to cost. Amidst all the gloom and noise, however, whispers the voice of opportunity. The core requirements under the systematic internaliser (SI) regime for over-the-counter (OTC) derivatives are designed to simulate the mechanics of a public exchange. So rather than worrying about squeezed margins and fewer ways to turn a profit, it makes sense to see greater market transparency as a stimulus to investor confidence and market fluidity – and hence better trading opportunities.
For sell-side institutions, MiFID II’s transparency rules are key. Any bank that can give clients the clearest prices fastest will have a major competitive advantage. That means working with, rather than against, compliance departments. It also means having an e-trading environment that is scalable and flexible, and built to harness the latest IT innovations.
There are two areas with great potential. The first one is moving to the cloud to unchain deployments from the millstone of legacy environments. In fact, the advantages of embracing cloud-based hosting are considerable and range from being able to beef up development environments at will to large potential cost savings through full automation. The second area is modernising front-ends to capitalise on web technology.
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Head of Project Execution