The Weekly Regulator- “Trust Me, I’m A Vendor”

So many exciting!  vendor!  press releases! about MiFID II total readiness.  But if you have not even started on MiFID II yet, don’t worry.  This is hype.

From what we gather…there will be not even be ARMs (Approved Reporting Mechanisms) under MiFID II.

MiFID II is going to have what are called Designated Reporting Service Provider (DRSP), it currently looks like every vendor that wants to shutterstock_254756605act as a reporting service under MiFID II will have to  to register as a DSRP.  That is ALL REPOSITORIES. Even if you are an ARM now you are going to have to go through the registration process de novo.  To boot, registration is probably not going to start until July 2016.

We’ve seen so many press releases about vendors who are “MiFID II ready,” “have total ARM connectivity” or “ are the preeminent MiFID II vendor.”  Please just stop.  This is fantasy and customers have just about had enough of vendors selling vaporware.

REMIT Rolls On

Current consensus is that ACER’s got minor troubles. Nothing unexpected, but right now it seems pretty clear that trade modifications are not flowing correctly into ARIS.  We are also hearing about sizing troubles, that ACER may not have correctly anticipated the amount of data coming to it. Interestingly, most brokers are (mostly) generating correct order and trade ACER XML.  My take is this is actually going better than I thought it would.  However, there are real gotcha’ issues, such as when the broker simply produces wrong information (but in the correct format) it’s just very, very difficult to catch.   For example, if you execute a profile deal, but the broker sends it over as a ATC deal…..yea, that’s a tough one to identify.  

This Weekend…
If you find yourself having difficulty sleeping, might I suggest the REMIT TRUM ANNEX II??  Aviv Handler deftly points out we’ve got 5 months to go until the next gauntlet.  In a nutshell, gas and power traders will have to sort out how to take complex/shaped OTC trades and populate them into ACER XML and report to an RRM. This is a far more complicated kit.  We’ve been hard at work getting our ETRM to ACER XML conversion for Annex II running and will keep you posted.

The MiFID II Beast

Last week we mentioned the fact that there are a lot of firms that  may unexpectedly get caught up in MiFID II.  Yes, there’s even more trade reporting.  But the real beast is the capital requirements.  Known as CRD IV (basically Basel type capital requirements) but now applied to non-banks. Do you fail the MiFID II Ancillary Test?  Sorry, you’ve got until the end of 2017 to adopt a “Basel Compliant” capital structure.  Some rumors about extending this deadline, but this is nothing but loose chatter in the hallway.  Now would be a good time to buy your CFO a coffee and break the news, because if you get caught up in this she’s going to be busy for a long, long time.