The FIX Trading Community is to take over the administration of the Market Model Typology (MMT) project from the Federation of European Securities Exchanges (FESE) and will drive forward the market data initiative from now on as it seeks to expand into other areas of the financial markets.
The MMT project aims to improve the consistency of post-trade data across European Union (EU) trading venues and is seen as vital in the creation of a consolidated tape overview of Europe’s fragmented equity markets, aping the US situation.
Ever since MiFID I was introduced last decade the opening up of domestic exchanges to competition from multilateral trading facilities (MTFs) has led to a further fragmentation in European markets and an increased need for a consolidated tape. This project should aid this drive and, alongside the merger and acquisition of MTFs by established exchanges, help to knit together the European markets more effectively; something that has long been required.
Up until now the Federation of European Securities Exchanges (FESE) has driven the MMT project forward but with FIX now ensconced as the administrator of the standard more participants from outside the exchanges’ arena are expected to sign up with FIX’s membership comprising of buy-side firms, banks, brokers, technology vendors and trading venues; all of which should help to broaden industry participation in the project, MMT uptake, and future development. The project also incorporates a broker-led effort to shed more light on off-exchange trading data.
BATS will become the first trading venue to adopt the MMT standards later this year.
Project Background and MMT Details
The MMT initiative was first launched by FESE to support the implementation of the original 2010 Committee of European Securities Regulators’ (CESR) recommendations on post-trade reporting standards. Since then, CESR has been incorporated into the new European Securities and Markets Authority (ESMA) and the MMT project has been significantly developed and enhanced through the collaborative efforts of exchanges, MTFs, market data vendors and trade reporting venues with the aim of standardising post-trade data and providing greater transparency.
Now that FIX is administering the standard, making it available for all market participants, uptake should develop quickly and transparency across marketplaces increase, while future development will be helped by the Community.
Technically speaking, the FIX Protocol has been extended to support the MMT standard in its market data and trade reporting message suite. However, MMT is designed and allowed to be freely used in any protocol - meaning non-FIX protocols are covered too - which makes MMT a truly independent and open standard which is available to all.
Widespread adoption of the MMT standard will result in clean and consistent post-trade data, which is represented the same way regardless of trading venue or over-the-counter (OTC) reporting venue. This will make it easier to consolidate data from multiple venues and to create the desired European consolidated post-trade tape, although of course a lot of vested interests and other non-technical obstacles still remain.
Commenting in the announcement, Judith Hardt, director general of FESE, said: “We are delighted that MMT has grown to the point where it can become an industry standard. We look forward to MMT being adopted beyond the exchange community, with all the benefits that it holds for end investors.”
Further support for the initiative was forthcoming from Jim Kaye, co-chair of the FIX Trading Community Global Steering Committee, and Simon Gallagher, chair of the MMT Steering Committee, who said in a statement that, “moving the MMT standard under the FIX standards ensures it is free to use for the entire industry. It is important that the members of the FIX Trading Community broaden the development and implementation of the MMT standard and come together to resolve any future events.” The two FIX members’ day-jobs are respectively director of execution services at Bank of America Merrill Lynch (BAML) and Director of Euronext.