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"There has never been a piece of regulation as broad and as far reaching as MiFID II": Matthew Coupe, Director, Market Structure, Barclays and Co-Chair Regional Committee & EMEA Regulatory Subcommittee, FIX Trading Community

20 March 2017

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Matthew Coupe is director of market structure for the European Markets at Barclays, based in London. He advises the markets division on future regulatory change, forms the advocacy position of the markets division on areas of regulatory change, and engages with politicians, trade associations, regulatory bodies and clients to make sure this is articulated effectively.

Prior to joining Barclays in March 2015, Matthew was director of regulation and market structure EMEA at Nice Actimize with overall responsibility for sales and marketing, and analysing the effects of new regulation on existing and new clients.

In additional to his role at Barclays, Matthew also co-chairs the FIX EMEA Regulatory Subcommittee. A regulatory specialist, he is an expert in high-frequency trading and market surveillance in the post-MiFID landscape and their implications for trading desks and compliance departments. Bobsguide sat down with the industry expert to discuss MIFID II, industry predictions and highlights from the FIX Trading conference.

What trends do you see from the FIX Trading Event?

It’s a really exciting time for FIX Trading at the moment. If you look at the turnout from today’s conference, it’s a testament to what’s going on in the industry and the interest we’ve got. There are record numbers in attendance, and we’re going back to the stability of the pre-financial crisis. We’ve also got a lot of serious support and active engagement.

The first panel we had today included Kay Swinburne, MEP for Wales, Rodrigo Buenaventura, Head of markets department, European securities and market authorities (ESMA), and Philippe Guillot, Executive director, Autorite des marches financiers (AMF). This is brilliant. They were discussing issues and providing their own insights to the industry. They also see FIX as trying to make movements in the industry. We’re a very unique organisation in the sense that we have a wide range of industry professionals. We have the buy side, the sell side, the venues and the vendors, which is a very unique standpoint. 

That being said, the industry has got a huge amount of challenges to overcome. Everyone is talking about MIFID II. Today has shown us that there’s a huge amount of regulation that we need to achieve. There’s a huge amount of data crunching that we have to do. What FIX does is around standardisation and interaction, and to be able to help the industry. If the industry can provide standards, it also reduces the cost of implementation. And it’s not just the banks role to reduce the cost of standards. If the vendors have a standardised engagement, it can assist them in not having to build a bespoke product. From a venue perspective, if there’s a standardised implementation, then it’s much easier for their clients.

How is FIX implementing the issues you highlighted?

MIFID II requires firms to clock synchronisation across the whole transaction. This actually means it’s not just one firm that has to implement this change, it’s everyone coming together and harmonising. It’s a significant challenge and very technical, but if none of the firms can clock synchronisation then this will be a big issue. It’s a core thing that firms need to get right.

Transaction reporting is also a big issue. If you speak to any of the senior buy side teams today, they will be able to tell you that transaction reporting is a problem. Trying to address all these areas with standard views will help solve a lot of headaches. It also de-risks their firms. Whenever you’re implementing, you’re there making sure that implementation is done right. The process is very technical and a core issue that firms need to get right.

FIX has evolved primarily from an equities background. This is the first FIX trading conference where there are non-equities involved and has a major part of the agenda. This is because the regulation involves large amounts of non-equity regulation and it requires a huge amount of standards in non-equities. There are topics around fixed income and particularly the derivative markets.

There is going to be a stronger need towards fixed income markets wanting to have electronic engagements within their systems. Telephone trading is not dead, but we will see protocols and the way trade is interacting in the market place is going to evolve. Electronic standardisation is also going to become a core component.

What are your thoughts on MIFID II?

We’ve got a massive piece of regulation we need to land before January 2018, and we’re in March. The industry has a huge amount of work to do, as do the regulators. All together there’s a huge amount of work to do to lift this regulation in an effective way.

With MIFID II, there’s a number of challenges with the regulation because it is has such a wide range of impact. Think about Dodd-Frank, its primary focus is to change the regulatory system for derivative trading. MIFID is pretty much doing everything except spot FX.

There’s never been a piece of regulation this broad and this far reaching. So we’re going to see unforeseen circumstances, we’re going to see hurdles along the way, but the key aspect is getting our heads down and working through it to get delivery. It’s a critical project to ensure other macro elements also get achieved.

From a FIX perspective, we’ve been looking at best execution, and we’ve got a large amount of standardisation looking at how the reporting works, how firms understand what they need to report, and what’s relevant and what’s not. And going through that, it’s incredibly detailed. There’s hours of telephone calls to be done. Data record keeping is also a huge project and extremely critical. But, it’s another area that shows where the industry is working together.

Is MIFID II driving a divide between traders and regulators?

I think market interaction has changed, the environment in terms of where we’re working in has changed. There’s always a political angle to that. I think we have a much more collaborative viewpoint.

A standing example of this is in the ‘Dealing with MIFID II in a global regulatory framework’ panel, everyone spoke their own minds in terms of the challenges they saw and how they can help the industry. It shows testament that the industry is working together. The regulators are covering such wide subjects, that it’s part of our job as the industry to educate and assist regulators in what their trying to do. From a FIX perspective, if we see there’s a challenge in implementing changes or we see any inaccuracy, it’s not about the outcome, it’s about how we get execute the decision.  Then we create a very good dialogue with industry experts to assist in moving forward.

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