Solving the Real-time Needs for MiFID II and MiFIR Compliance
Fixed Income Software, a FinTech startup that aims to commoditise high-performance software for fixed income market participants, announces a real-time audit and monitoring platform for MiFID II and MiFIR compliance.
Although MiFID has been around since 2007, fixed income and derivative markets were relatively untouched by the regulations. Developments in the trading environment since MiFID was first launched and the financial crisis of 2008 have resulted in a drive to extend the regulation. The rules known as MiFID II and MiFIR are focused on the fixed income and OTC derivative markets and aim to increase transparency, better protect investors and support supervision of trading activity within the EU.
When does it take effect and what are participants doing about it?
MiFID II and MiFIR are targeted to be transposed into national law of EU member states by mid-2017, and planned to be effective from Jan 2018. Fixed income participants have already been putting significant effort in to understanding the regulation and forming a plan to comply. Some of the regulation requires formal process and procedures to be put in place. Many requirements are aimed at the real-time nature of today’s electronic trading, requiring automated solutions to be implemented by, not only trading venues and markets, but also firms participating on the buy and sell side of trades.
What’s the technology problem?
Real-time trading platforms implemented by dealers and clients are inherently complex systems, made up of many discrete functions including: market data aggregation, price generation, quoting, market connectivity, trade execution, post trade STP. The real problem here, is one of distributed sub-systems that all need to play a part in a fully compliant MiFID II / R solution.
Our team has built up a wealth of experience in building systems for fixed income and derivative trading over the years, mostly using tried and tested technologies that suited at the time. What we’ve seen over the years, is that although all market participants eventually build systems that quote, execute and STP trades, they all do it in slightly different ways but achieving the same results. Some favour a vendor product, some an in-house solution and often a combination of the two, and that’s just the software. Middleware, data centres, co-location and cloud infrastructure adds a further integration challenge, to an already complex set of sub-systems.
What is our unique approach?
We feel it’s wholly unreasonable, too costly and risky to start re-thinking a complex architecture, especially when it’s critical to a firm’s core business activities and reputation. So we have come up with a plan that we feel ticks a lot of boxes:
Start with the domain experts - We’ve brought together a team of experienced fixed income BA’s and technology specialists, who can evaluate trading environments and understand what they do and how, in a timely and efficient manner.
Use high performance software "off-the-shelf" - We have built the necessary common components that can be seen as commodity software, including a real-time rules engine for compliance monitoring and business intelligence, and a best execution calculator to provide visibility of fair quoting. All on a platform where you can add your own high-value components using a simple API.
Quick and easy business integration – Aggregate data from separate business silos without third party middleware, complex configuration or setup. Supporting integration to multiple transport types and sub-systems that may be running in dedicated data centres, co-location or cloud infrastructure environments.
A technology that brings it all together - A distributed technology that is built from the ground up for financial applications. Extend with your own high-value business components using a simple API. Deploy the platform on local, co-location and cloud infrastructure environments, simultaneously. It supports bank grade line encryption, where sensitive data or external links are required, automatic audit history collection and resilience features are built in as standard.
Fixed Income Software is a FinTech start-up that specialises in providing software and services to financial market participants. We aim to:
- Provide cost effective and low risk solutions to solve common industry objectives like regulatory compliance, business intelligence, reporting and connectivity.
- Give you access to experienced technology and business SME's who can help advise, design and build your financial systems.
- Provide you with systems that enable industry collaboration while meeting performance, privacy and security requirements.
In 2014 "eConnect Connector framework" was released and in 2015 was used by Neptune Networks, a consortium of around 15 top tier investments banks and 25 of their buy side clients. The framework formed the basis of the Neptune GUI, providing real-time, pre-trade AXE indications on a secure internet hosted GUI.
Ajay Kapoor founded Fixed Income Software in 2014 and has over 15 years experience in the investment banking and finance industry. During which time has helped develop fixed income and OTC derivative trading solutions for many of the cities major investment banks, including J P Morgan, Credit Suisse, HSBC, Lloyds Banking Group and LCH.