Progressing Preparations: A Case Study in MiFID II Implementation for Market Operators

Preparing for the Markets in Financial Instruments Directive II (MiFID II), or any other regulation of this size and scope, can be a difficult task for the entire capital markets ecosystem. For those who are directly affected by the regulation, collaborating with vendors to develop a compliance plan and implementation program that addresses the many technology challenges is critical. Importantly, the plan needs to allow a sufficient lead time to allocate the necessary financial and human resources.

Organizations outside of Europe that are not directly affected by MiFID II can also learn from the experience. After all, MiFID II did not arise out of a void. The G20, Financial Stability Board, IOSCO, World Federation of Exchanges and others have been working for years on global standards to make the financial markets more competitive, fairer and safer to the benefit of end-investors and customers.

As an exchange, clearing house and CSD owner and operator in Europe, and also a vendor to the world’s market operator community, Nasdaq is affected significantly by the impending regulation. As such, we have structured a program to meet the outlined technical standards for trading, clearing, risk management and surveillance systems. We are also preparing to make the necessary changes in the systems used by Nasdaq’s regulated operations in addition to the systems offered to external customers by our Market Technology business to comply with the requirements.

MiFID II is comprehensive, in that it applies across several areas in the trade lifecycle. It will affect many aspects of Nasdaq’s operations, but it will not entirely change the way the exchange operates. In fact, the systems that we use ourselves and that we extend commercially through our Market Technology business, already fulfil most of the new MiFID II technical requirements.

Overall our program, which we are still implementing to hit critical milestones, distills 26 major initiatives across 30 identified themes, which have produced 80 Business Architectural Outlines, which designate the various system changes required and how those changes affect the systems. Our customers are of the utmost importance and we have, and will continue to work with them on changes needed to support regulatory compliance as well as consistency with Nasdaq’s internal systems.

The obligations identified in our MiFID II program fell under a few major categories: data, market integrity, transparency, market structure changes. You can read more about the requirements covered in these buckets, as well as lessons learned and best practices that we have recognized by downloading our paper here:

Download:The Impact of MiFID II on Trading, Clearing and Surveillance, A Market Operator’s Viewpoint

Learn more about Nasdaq’s Member Preparations for MiFID II in our MiFID II Resource Center

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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