MiFID ll

Charles River’s MiFID ll Solution Overview

Charles River provides investment managers with an end-to-end solution for meeting regulatory obligations under the European Union’s Markets in Financial Directive II (MiFID II). The solution captures key data and trade lifecycle decision points needed to comply with new requirements for trade and transaction reporting, best execution and commission management.

Global Impact

Taking effect on 3 January 2018, MiFID II will impact every stage of the buy-side trading lifecycle. While MiFID II is an EU regulation, buy-side firms globally will be subject to many aspects of the legislation, depending on their level of interaction with European clients, trading venues and securities. The table summarizes how a firm’s domicile dictates which MiFID II obligations apply.

Multi-Asset Scope

MiFID II regulatory requirement apply to all asset classes, including equities, fixed income, derivatives, commodities and structured products. Asset classes that are exempt under MiFID II include spot FX, money market instruments, and bank loans.

Does MiFID Apply to My Firm?

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Charles River Product Directors discuss the impact of MiFID II on asset managers globally, and immediate steps firms should take to ensure readiness.

Part 1: MiFID ll Scope and Global Impact
Part 2: Ensuring MiFID Readiness

MiFID II Regulatory Requirements: Our Approach

Trade Reporting

Real-time trade execution reporting

What’s required? Firms must report trade execution details to their National Competent Authority (NCA) in near real-time, including volume, price and venue. To expedite reporting, firms use an Approved Publication Arrangement (APA) to report trades to NCAs on their behalf.

Charles River’s Trade Reporting Solution generates and transmits the trade data extract to an Approved Publication Arrangement (APA). Bi-directional cancel/correct workflows streamline communication between the APA and buy-side firm when trade reports require correction.

Transaction Reporting

Capture, track and report key data

What’s required? Detailed trade transaction reports must be submitted to NCAs within one day. The report includes 65 fields, listing the buyer & buyer decision maker, seller & seller decision maker, investment decision maker & executor, transmission details, instrument details, and various flags. Firms can use an Approved Reporting Mechanism (ARM) to streamline transaction reporting to NCAs on their behalf.

Charles River’s Transaction Reporting Solution assembles and enriches transactions, then transmits the report to an Authorized Reporting Mechanism (ARM) using bi-directional workflows. Charles River partners with leading APAs and ARMs to streamline reporting.

Best Execution

Measure execution quality across asset classes

What’s required? Firms must report their top five execution “venues” annually, monitor and manage the quality of executions obtained, and track execution factors that led to a change in the execution venues.

The Charles River IMS provides clients with the ability to analyze trade execution data in the context of either a “best execution” or “transaction cost” framework based on asset class. This framework provides a configurable option to allow clients to weight and adjust calculations in response to availability of market data.

Commission Management

Track commission budgets & targets

What’s required? Commissions must be unbundled from research under MiFID II. Commission Sharing Arrangements (CSAs) are allowed to pay for research. Firms maintain Research Payment Accounts (RPAs), which must be independently budgeted per fund.

Charles River IMS allows clients to break out research and execution commissions, define budgets or targets in aggregate or per fund, and view commission dollars in relation to targets.

MiFID ll Resources:

MiFID ll Readiness

MiFID ll Readiness Brief

Video

Why a Single Technology Platform Makes Sense

Meeting MiFID ll Regulatory Obligations
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Read our MiFID ll Insights and TABB Forum article –  MiFID ll Insights

Continuing MiFID II Preparations

MiFID II for US Firms

Featuring UnaVista, DTCC & Charles River

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