I attended the FIX Protocol EMEA quarterly briefing yesterday evening and was asked to sit on a panel to discuss the impact of MiFID II, especially in light of the CESR recommendations that were published the same day. Whilst it was clear that some of my fellow panellists had had more chance than me to read and digest all 162 pages of the report, the thorny issue of having a consolidated post-trade tape featured strongly in the discussions.
The problem is that without clear, timely and complete execution data it’s difficult for the buy-side to understand liquidity patterns and evaluate execution quality properly. This goes right to the heart of MiFID’s original objective as it’s pretty difficult to demonstrate best execution if you can’t measure it accurately. This was tricky enough pre-MiFID but is made harder still by the fact that the multitude of new venues that have emerged since November 2007 all unilaterally created their own (often conflicting) acronyms for describing different trade types.
The intriguing possibility was raised that maybe FPL themselves could play a role in trying to agree a common set of standards for the production of such a tape. Once the rules were agreed then it could be left to market forces to allow different firms to create and market their own products. FPL represents a very well respected professional body that has done a great job in developing and disseminating the FIX Protocol across the finance industry. And, crucially, it is one of the few organisations that is consistently able to get market participants to set aside their own vested interests for the greater good of the industry.
It’s an important issue because if we can’t sort this out for ourselves, then CESR will come along and take our toys away completely and impose a utility based Mandated Consolidated Tape (MCT) as we have in the US. If CESR does go down this route then it’s hard to see how the whole thing wouldn’t be hijacked by all the different political interests of Europe’s member countries which would be to the detriment of everyone.
Anyway, have your say:
And, if you have a better idea, we’d love to hear it!