2011-10-20

By staff reporter

The long-awaited MiFID II (Markets in Financial Instruments Directive) has at last been published by the European Commission. In addition to imposing new restrictions on high-frequency trading, the revised publication defines new rules for access criteria between central counterparties and trading venues.

Charles Race, vice-president of Northern Europe at Informatica, comments on how the ground-breaking legislation shows that regulators are reacting to the trading data explosion which the UK is facing.

“MiFID II’s focus on counterparty regulations demonstrates the increased need by banks for accurate, consistent and comprehensive counterparty data to support their risk management and regulatory compliance requirements," he said.

"The financial services industry is armouring itself –lacking the right information can result in higher capital reserve allocations than necessary, which takes away capital for growth, or even worse lead to insufficient reserves that result in the bank becoming insolvent.”

“As the global economy struggles to recover from the economic downturn, the risk of counterparties becoming insolvent is increased. It’s a cause for worry – not only for bank shareholders but also for governments. Hence, MiFID II’s tightening control of access criteria between central counterparties and trading venues.”

“MiFID II highlights the urgent need for market participants to harness the trading data explosion, enabling regulators to more effectively evaluate trading efficiency, transparency and safety."

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