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Published byBarnard Riley Modified over 6 years ago
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Unravelling Ariadne's MiFID II Thread: Pre- and post-trade transparency for non-equity markets
JORGE YZAGUIRRE SCHARFHAUSEN
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The fixed income markets after MiFID II
Jorge Yzaguirre Scharfhausen - Markets Director, Equities, Fixed Income and Derivatives, Bolsas y Mercados Españoles (BME) Current fixed income trading models in BME Regulatory & market milestones T2S & MiFID II regulations main impacts Solutions provided by BME’s FI trading Platforms Future fixed income trading model in BME Next steps
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Current fixed income trading models in BME.
Regulated Market Commercial Paper, Bonds, Covered Bonds, Securitizations. Market Members are resident & non resident entities. Cash trading & repo. Bilateral trading. Standard settlement cycle is T+2, but up to both counterparties. Platform Retail bonds listed in AIAF. Treasury Bills, Government Bonds for retail distribution. “All to all” market model. Multilateral trading, with specific bilateral segment. Cash trading. T+2. With communication & settlement instructions to IBERCLEAR. Regulated Markets Regional Governments’ securities. Cash trading. T+2, with communication & settlement in local CSDs. MTF T- Bills, Government Bonds & STRIPs. Participants are Spanish Treasury’s Primary Dealers; residents and non residents. Interdealer market model. Multilateral trading, own account, firm quotes and blind. Cash trading. Standard T+2 settlement cycle, T+3 in new auctions. Repo. POA based matching instructions in IBERCLEAR. Developed for mid-cap companies access to fixed income funding. Uses SEND platform technology. AIAF SEND EXCHANGES SENAF MARF
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Current fixed income trading models in BME
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Regulatory & market milestones.
Reform & T2S Phase I: April 27th 2016 Phase II: Sept 17th 2017 T+2. Change in registry. Single settlement system. Pan-European post-trading standardization. MAD (I & II) / MAR July 3rd 2016 Guarantee the integrity of the financial markets. Avoid insider dealing & market manipulation, suspicious transactions reporting, etc. Research publication. Definition of homogeneous rules in markets. MiFID 2 /MiFIR January 3rd 2018 Market transparency ( pre & post ). Best execution. Investors protection. Market structure. Trades reporting. CMU 2017 Capital mobilization to SMEs, new infrastructures and projects financing. Deeper capital markets. Facilitate transnational investments. Promote the stability of the financial sector. Surveillance convergence and common set of rules.
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T2S & MiFID II regulations main impacts
Breaks the bi-univocal historical relationship between trading and settlement. Registry & settlement procedures are unified with those in equities Markets. Accounts daily variations disappear. 3rd parties accounts records are substituted by a new Post Trade Interface -PTI. Impacts Trading Members T2S (Sept 2017) Impacts Clearing Entities Transparency in Markets ( pre & post ). Trade reporting to surveillance authorities. Trading on-venue. The majority of FI trading will fall under the OTC / SI regimes. Impacts Trading Members MiFID II (Jan 2018)
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Solutions provided by BME’s FI trading Platforms
T2S (Sept 2017) MiFID II (Jan 2018) BME trading platforms are adapted to be T2S & MiFID II compliant. Differentiate between Trading Members and Clearing Members. New accounts structure at each Member’s level. Adaptation to new T2S flows & messages. Resolve transparency obligations. Fulfil the new regulatory requirements. Avoid the inclusion of Markets Members in the Systematic Internalizing regime.
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Future fixed income trading model in BME
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NEXT STEPS June -July June May 2017 2017 2017 May 6th -7th 2017
New API specifications May 2017 New RFQ system available for testing May 6th -7th 2017 New POA template & formal documentation delivery T2S migration weekend test
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