Reflections on FIX Trading France 2018

The FIX Trading Community’s second annual France Trading Briefing, held in Paris on November 22, picked up the baton and ran with a number of themes already touched on at its September Nordics briefing.

Ongoing digestion of MiFID II 

MiFID II continues to exert a powerful gravitational pull, and the ongoing evolution of the regulation and its impact on liquidity providers, their business models and the landscape they operate in, as well as its ramifications for the pace and trajectory of technological innovation, remain particular areas of focus.

During what was a stimulating exchange of views on this topic, Julien Leprun, Head of Quantitative Unit - Market Surveillance, Autorité des marchés financiers (AMF) noted that the different levels - and particularly a lack - of automation around MiFID II compliance across firms within Europe was a concern in the context of future regulatory change.

It's all about data and standardization

Regulatory reporting is already evolving, and that is only set to continue, and firms must recognise and embrace that evolution. Data is still a significant pain point for firms when it comes to fulfilling their reporting obligations in the post-MiFID II environment, and FIX is looking to play its part in standardization efforts, notably around reference data. 

Wider usage of existing FIX reference data messages for indices, parties, entitlements and so forth would facilitate standardization when it comes to integrating reference data providers for all post-trade activities - this would include trade confirmation, regulatory reporting and collateral management. This is key when it comes to expanding levels of data standardization both within and, between firms.

ISINs and avoiding overwhelming processes

The proliferation of ISINs (International Securities Identification Numbers) in the OTC derivatives space also came under the spotlight, with millions of ISINs being generated due to the need to create an ISIN for each termination date of a swap. Clearly, this wave of new ISINs risks overwhelming existing processes.

Automation remains key

Another challenge is the highly manual nature of bond issuance - there is clearly scope for further automation in this area, as well as in the asset management space, to manage orders more effectively across multiple asset classes and trade confirmations.

One of the key points in respect of issuance automation is the creation of ISINs before issuance, including the use of dummy ISINs. FIX is currently focused on addressing the necessary workflows for these processes.

The future role and status of the UK

Unsurprisingly Brexit and its potential consequences also loomed large in Paris, not least the uncertainty that exists around data requirements and standardisation but also about regulation going forward.