July 05, 2016
by Carly Kilgore

New Technology is the Key to MiFID II Compliance

Banks Prepare for MiFID IIWith the MiFID II deadline looming in Europe and Brexit shaking up the market structure worldwide, financial firms consistently face the pressure of compliance. New mandates mean new processes to implement, and often, disruption to business, which ends up costing firms significant amounts of money. The 2016 European Fixed Income Benchmarking Report notes that 52% of companies have experienced increased costs due to implementation of European regulations that have negatively affected their fixed income trading operations.

Companies dedicate entire teams to understanding and implementing new compliance measures, with MiFID II particularly top-of-mind among European financial firms. The same benchmarking report notes that 48% list “Understanding the Regulations of MiFID II” and 38% list “Implementing MiFID II Guidelines” as a top 3 organization priority, even falling above typical business processes like “Identifying New Emerging Market Opportunities” or “Finding Alternative Methods to Source Liquidity.” The concern is shared in the United States markets as well, where “Understanding and Implementing US Regulatory Guidelines” topped the list of concerns at 68%.

With regulation taking up so much attention, how can companies stay compliant without breaking the bank or disrupting their business?

The key, many firms are discovering, is replacing one-dimensional, legacy equipment for the adaptability and efficiency afforded by new technology. The majority of buy-side traders surveyed in the European Benchmarking Report plan on investing at least 16-30% of their total budgets on new technology in the next 12 months.

Adopting the right technology at a firm can make implementing compliance mandates easier on teams and on their wallets. Generally, firms are on the hunt for new technology that meets the following requirements:

  • Compliance structures are already built into the system
  • Features state of the art technology that is reliable
  • Able to cope with new regulations and keep the firm legal. The technology is capable of adapting not only as your company grows, but also as regulations change, and can automatically be updated to account for changing mandates.
  • When working with an outside vendor, having a tried and tested management team that understands the industry.
  • Doesn’t disrupt business operations and interacts seamlessly with existing devices and procedures.
  • Is cost effective. The solution doesn’t require extensive maintenance or costly replacements when regulations change.

With these qualifications in mind, Wall Street CIOs are increasingly investing in new, modern platforms to keep their firms secure and compliant. Not only are they more affordable than ever, updated technologies give financial firms the flexibility to adapt to changing regulations, better reconstruct trades, and overall, conduct business more efficiently.

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