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MIFID Support on X_TRADER Platform

Overview

This topic provides you with support for MiFiD II compliance using the X_TRADER® platform.

MiFID II is European Union legislation that regulates firms that provide services to clients linked to financial instruments and the venues where those instruments are traded. The legislation introduces new rules and transaction reporting obligations that will go into effect on January 3, 2018. The rules are intended to:

  • Improve investor protection
  • Reduce the risks of a disorderly market
  • Reduce systemic risks
  • Increase the efficiency of financial markets and reduce unnecessary costs for participants

The rules affect Direct Electronic Access (DEA), algorithmic trading, high frequency trading (HFT) and market making and introduce very specific transaction reporting requirements.

MiFID II defines algorithmic trading as trading in financial instruments where a computer algorithm automatically determines individual parameters of orders, such as whether to initiate the order, the timing, price or quantity of the order, or how to manage the order after its submission, with limited or no human intervention.

MiFID II defines DEA as an arrangement where a trading venue member, participant or client permits a person to use their trading code to electronically transmit orders relating to a financial instrument directly to the trading venue.

Support for Transaction Reporting Requirements

Trading Technologies provides the following support for MiFiD II transaction reporting requirements:

  • Gateways
    • TT is adding fields to each of its Gateways to support new fields that each exchange is adding to its API specification to comply with MiFID II.
    • MiFID II mandates two different standards for timestamping, one for HFT and one for non-HFT. TT is adopting the more stringent standard across the board by enhancing its timestamping on each Gateway to provide microsecond-level precision synchronized to global GPS on each order action.
    • As many TT customers use Gateway Audit Files for compliance purposes, TT is adding fields to each Gateway’s Audit File to capture the relevant MiFID II data.
    • The following TT Gateways have been release in support of MiFiD II:
  • X_TRADER
    • Customer Defaults is a feature in X_TRADER that allows users to populate certain fields for order actions that are routed to certain exchanges. TT is enhancing Customer Defaults to add support for MiFID II-related fields.
    • TT is adding columns in several windows of X_TRADER to display the new fields.
    • When submitting an RFQ, the MIFID required customer defaults values will be included in the request.
    • X_TRADER online help for MiFiD II support:
  • FIX Adapter
    • New FIX tags for MIFID II will be normalized across exchanges as much as possible following the FIX extensions proposed by the FIX Trading Community's MIFID II Working Groups.
    • TT is adding FIX tags to allow customers to populate the appropriate fields for FIX order routing to each exchange and to receive the tags on FIX Drop Copy.
    • The following tags have been modified to support MiFiD compliance:
  • TT User Setup (TTUS)
    • Administrators can administer Customer Defaults for X_TRADER users and can lock them down such that end users cannot override their values. TT is adding support for the new MiFID II-related fields in TT User Setup as well as in X_TRADER.
    • Account Defaults is a feature in TTUS that dictates how certain FIX tags are populated in FIX Adapter. TT is adding support for the new MiFID II-related fields to Account Defaults in TT User Setup.
    • TT User Setup online help for MiFiD II support:
    • Algo permissioning?