The European Union released the Markets in Financial Instruments Directive (MiFID) in 2007 to govern financial markets as well as companies, funds, and banks. MiFID provides legal guidelines that cover all kinds of financial instruments and organizations.
Markets in Financial Instruments Regulation (MiFIR), the successor of MiFID, expands the scope of the instruments that need to be reported by financial institutions. To meet these new reporting requirements, organizations must enhance their source systems to capture essential information like short-sale flags, transaction executors, transaction decision makers, and underlying client data such as passport number, national identification number, and country of residence.
Typical buy-side firms will have many disparate systems in place, from order booking to back office activities. Because these systems are used for different asset classes, it’s important to identify the right system for sourcing the data required for MiFIR reporting. As a result, it becomes more complex to map product and client reference data from individual systems.
To streamline the MiFIR reporting process, organizations must develop logic systems to identify reportable transactions and filter out non-reportable transactions to avoid rejections. With multiple regulations in place, leveraging an existing data mart, like the European Markets Infrastructure Regulation (EMIR) data mart, is helpful for many organizations. As MiFIR reporting volume continues to grow, it is important to have a technology solution to increase reporting accuracy and manage any possible rejections and exceptions that may arise on a daily basis.
Mindtree understands MiFIR and its implications. Here’s a real world success story about how we recently helped a UK corporate and investment bank design an EMIR reporting system that seamlessly pulls data from multiple data sources.
Challenge: To comply with EMIR requirements, the UK corporate and investment bank needed to build an integrated platform that would pull trade data from more than 20 trading systems with a huge variety of trading and clearing scenarios and data models. Many of the older systems lacked EMIR data elements. In addition, a massive volume of historical trades had to be back-loaded into the trade repository.
Solution: Knowing that they could not build the platform on their own, the bank hired Mindtree to create an EMIR solution. Mindtree designed a data mart to aggregate required EMIR data from all source systems with data validation and reconciliation. The platform maps the data fields required for EMIR reports on trades, amendments, valuation, and collateral. Mindtree engineers also designed a flexible user interface that automates trade reporting and includes exception management capabilities to handle non-standard reporting information.
Results: The cost-effective EMIR reporting solution covers all five over-the-counter (OTC) derivative asset classes: interest rate, foreign exchange (FX), commodity, credit, and equity – as well as exchange-traded derivatives. Mindtree completed the project well within the EMIR reporting deadlines.
Interested in discussing how Mindtree can help streamline your organization’s MIFIR reporting requirements? Want to know more about the full range of Mindtree’s capital markets technology consulting? Email me at Sajan.Gopinathan@mindtree.com