0. MiFID - Technology Solutions
Pradeep Hardikar
Director & Practice Leader Banking and Financial Services

1. MiFID - Technology Solutions In Search of IT Excellence
Pradeep Hardikar
Director and Practice Leader

2. Agenda Key MiFID Directives Impact on Stakeholders Impact on Systems
The Way Forward
Questions

3. Key MiFID Directives Investor Protection – Articles 18, 19
Best Execution – Articles 21, 22
Coherent Framework – Article 69
Transparency – Articles 27, 28, 29, 30, 44 & 45
Integrity – Article 25
Passporting – Articles 31, 32, 33, 34

4. Impact on Stakeholders
Venues
Regulated Exchanges – Increased competition
MTFs & Internalisers – Increased opportunities + Increased obligations
Investment Firms
Increased opportunities
Tighter controls needed
Investors
Gains & Increased protection
Data aggregators & Publishers
Increased traffic
Increased opportunities (new Interfaces)
Across The Organisation!!

5. IT Impact – Investor Protection , Best Execution & Coherent Framework
Suitability & Appropriateness – Changes to CRM / KYC systems
Track & record client communications
Customer data, prices, Instruments, Size of trades, Time stamps
Increased protection = Increased paperwork
Best Execution
Smart order routing
Combined order book
Internalising engine – Continental EU impacted
Order audit trail
Proving Best Execution? Reporting!
Coherent Framework
End to concentration rules
Changes to OMS/ORS

6. IT Impact – Possible approaches?
Reference Data
Generic reference data framework required
Customers, Venues, Instruments
Messaging
Adopting open interfaces to message management
Common standard needed
Architectures
Multiple interfaces, Volume increase, Complex messaging, Complex biz logic
SOA – Allows best of breed components to be used
Order Management Engines
Further complexity to algorithmic systems – Real time decision making
Best Execution – Complex biz logic

7. Combined Order Book In Memory
Order Processing Flow – Systems View
Market Data Provider
Combined Order Book In Memory
Market Data system
Rules Engine
In Memory DB
Open Order Processing Logic
Order Processing Engine
Order Audit Trail
Smart Order Routing
Re route To Venue
Communication System (COMS) (Parser, Config file, Formatter)
Quoting
Broker / Alternate Venue
Exchange / Alternate Venue
Internalize
COMS
Trade Processing Engine
Open Order DB
Reporting
Position Mgmt
Exchange / Data Aggregator / Proprietary
Compliance Reporting Engine
Market Data Archive
Order Data Archive
Trade Data Archive

8. Technology Solutions – The Way Forward
Combined Order Book
Smart Order Routing
Order Audit Trail
Quoting and Reporting
Compliance Reporting Engine

9. Technology Solutions – Combined Order Book
Impetus
No concentration rules
Advent of MTF and Internalisers
Best Execution obligations
Challenges
Deluge of market data
Varied cost of trading
Market access
Solution
Streaming market data
In memory database
Store details, use aggregates

10. Technology Solutions – Smart Order Routing
Impetus
Best Execution obligation
Fast moving markets
Challenges
Requires COB
Speed and Efficiency
Ability to locate hidden liquidity
Ability to identify spoofing
Solution
Build COB
Direct access
Rules Based
Evaluate and Improve

11. Technology Solutions – Order Audit Trail
Impetus
To prove Best Execution
Ability to analyze
Compliance Requirement
Challenges
Multiple points of data capture
‘What time is it?’ – Ritchie
Data Storage
Solutions
Data tagged to executions
Market data history

12. Technology Solutions – Quoting and Reporting
Quoting and Trade Reporting
Impetus
Quoting (Pre-Trade Transparency)
Reporting (Post-Trade Transparency)
Attract Order Flow
Challenges
Venue?
Mechanism?
Format? Infrastructure?
Cost?
Solutions
Industry Utility
Proprietary

13. Technology Solutions – Compliance Reporting Engine
Impetus
Best Execution Obligation Proof
Stop Abuse Ahead of Time
Challenges
Humongous Data
Compliance Specification
Incident Reporting and Follow-up
Solutions
Online Alerts
Workflow Monitoring System

14. Implementation Methodology
Four Stage approach – Spans life cycle of Firm’s MiFID compliance initiative
Stage 1: MiFID Readiness Assessment
Impact Analysis, Gap Analysis & Compliance roadmap
Stage 2: Implementation
Construction to address gaps identified in Stage 1
Stage 3: Rollout
Audits on systems modifications implemented in Stage 2
Stage 4: Continuous Improvement
SLA based Maintenance services

15. Thank you
Questions?