MiFID II

The value of working with Bloomberg

On 3 January 2018, Europe saw the Markets in Financial Instrument Directive (MiFID II) and the accompanying Regulation (MiFIR) come into force. Focusing on core principles of the creation of fairer, safer and more efficient markets, this broadest piece of financial industry legislation ever significantly changed market structures.

Uniquely positioned for the transition to MiFID II
As a partner to both the buy side and the sell side, we have built upon our current solutions for data, analytics, order management, reporting and trading platforms to provide a holistic suite of solutions from front to back-office that integrate seamlessly and also work independently.

Order management system integration
Bloomberg’s comprehensive MiFID II solutions suite is seamlessly integrated with Bloomberg’s Trade Order Management Solutions (TOMS) and Asset and Investment Manager (AIM), providing strategic enterprise workflow across the entire trade life cycle from  pre-trade to post-trade and everything in between.

Bloomberg’s order management solution for fixed income (TOMS) offers sell-side institutions pre-trade transparency and robust compliance monitoring tools. TOMS is fully integrated with Bloomberg’s suite of Sales Trader Workflow (STW) solutions help firms address MiFID II requirements for pre- and post-trade transparency, transaction reporting and best execution, as well as record keeping, trade reconstruction and surveillance.

With Bloomberg’s Asset & Investment Manager (AIM) solution, buy-side institutions can manage portfolios, optimize trading workflow and lower operational risk while meeting MiFID II’s regulatory obligations. AIM offers direct connectivity and seamless integration with Bloomberg systems for transaction reporting, best execution, record keeping, trade reconstruction and surveillance, as well as research budgets, commission and trading activity management.

Multi-asset class coverage
Bloomberg offers comprehensive cross-asset class coverage, including unrivaled derivatives coverage with Bloomberg’s database of 4.8 million structured products.

Pre-trade

Research
MiFID II requirements have had a significant impact on the research landscape for the buy side. The urgent need for heightened transparency and compliance under MiFID calls for a comprehensive research platform that integrates seamlessly into the research workflow.

Bloomberg’s single research platform allows the buy side to access, manage and value both their broker interactions and internal research to gain greater transparency and operational efficiency — all while making MiFID II compliance simpler.

Sales Trader Workflow (STW)
Under MiFID II, the sell side has new real-time reporting obligations including a need for capturing and recording all methods of communication surrounding price negotiation. Investment firms must publicly report actionable indications of interest and trades via an Approved Publication Arrangement (APA). Additionally, Systematic Internalisers (SI) will be required to publish quotes on most types of orders.

Bloomberg’s Sales Trader Workflow (STW) solutions can encompass the entire sales process of client order capture, pre-trade compliance, quoting, negotiation and order routing to external third-party electronic trading platforms. Automatically publish quotes to the Approved Publication Arrangement (APA) via Bloomberg’s Regulatory Reporting Hub (RHUB), and capture all electronic negotiation between the salesperson and the trading desk.

Voice Taker Workflow (VTW)
Under MiFID II, buy-side market participants have faced the considerable challenge of evaluating and satisfying transparency reporting obligations.

Bloomberg’s Voice Taker Workflow (VTW) is aimed at the liquidity takers who negotiate and agree on/to trades via IB. VTW links together the Execution Management System (TSOX), messaging system (IB) and trade confirmation system (VCON) to create a seamless workflow for voice execution off-venue and provide a full audit trail of the trade.

Trade reporting to an Approved Publication Arrangement (APA)
Under MiFID II requirements, firms must publicly report off-venue Actionable Indications of Interest and executed prices through an APA.

As a component of Bloomberg’s pre-integrated MiFID II solution, Bloomberg’s European APA and Bloomberg’s UK APA allow for the seamless publication of required trade details.

Data transparency
MiFID II requires trades on all financial instruments to be reported to the client’s National Competent Authority with reports to require 65 fields of economic terms and static data.

Bloomberg’s MiFID II transparency solution supports MiFID II obligations for pre- and post-trade transparency by providing an automated data feed with 120 fields covering approximately seven million instruments across numerous asset classes.

Onboarding and Legal Entity Identifier (LEI)
MiFID II requires investment firms to adapt their on-boarding process to make a number of changes to documenting their relationship with clients. Additionally, all firms must be identified by a Legal Entity Identifier (LEI).

Execution

Trading venues
MiFID II defines a number of trading venue types: Regulated Markets (RM), Multi-lateral Trading Facilities (MTF) and Organized Trading Facilities (OTF). Bloomberg operates both a UK and European MTF for cash bonds, repos, IRS, CDS , ETF’s and both equity and FX derivatives.

Post-trade

Transaction reporting
Under MiFID II, trades on all financial instruments must be reported to the National Competent Authority (NCA) to their market abuse and surveillance functions. Reports require 65 fields of economic terms and static data. Additionally, all transactions reported require a Legal Entity Identifier (LEI).

Bloomberg Regulatory Hub (RHUB) offers a full service platform that connects to the Bloomberg European APA and UK APA and Bloomberg’s European Approved Reporting Mechanism (ARM) and UK ARM to help firms comply with their regulatory reporting-related obligations. Bloomberg currently operates an ARM under MiFID II.

Bloomberg can now also issue and maintain LEIs required for trade and transaction reporting through LEI request and registration portal.

Best execution
MiFID II requires market participants to demonstrate that they have taken all sufficient steps to obtain the best possible result for their clients when executing orders. Trading venues and Systematic Internalisers are required to periodically publish reports relating to the quality of execution for individual financial instruments.

Bloomberg’s Transaction Cost Analysis (BTCA) solutions seamlessly integrate MiFID II requirements, across multiple asset classes, including OTC derivatives, to help firms set, demonstrate and monitor their order execution policy.

Record keeping, trade reconstruction and surveillance
MiFID II introduced sweeping record-keeping requirements for services, activities and transactions, including voice recordings. In addition, firms must monitor for prohibited market activity and quickly reconstruct the lifecycle of a trade across multiple channels.

Bloomberg Vault can archive emails, chats and voice recordings, as well as Bloomberg MSGs and IBs. In the same archive, Vault can store the pre-trade and trade data required for MiFID II. Archived data is stored on immutable, write-once-read-many (WORM) storage so that records can’t be deleted or modified throughout the required retention period. Vault also provides the surveillance controls to set and monitor activities.