Updated: Aug 15, 2018
By Peter Fredriksson – CEO of Baymarkets Technology, Sweden
Last month saw the return of the FIX Trading Community’s Nordic Trading Briefing to Sweden, the largest FIX event in the Nordics and now firmly established as a key date on the industry’s calendar. This year’s line-up also attracted record attendance – which I believe was in no small part due to the keynote speaker Klas Granlund, Director of the Market Analysis department, Finansinspektionen. For many, the pull was of course to understand first-hand about how preparations are going ahead of the MiFID II implementation date, which is now less than three months away.
It was especially encouraging to hear from Klas that the regulator is adopting a measured approach to implementing the new rules. He also stressed that they very much want to help people get the reporting right and to get the reports in on time. As such, Klas identified three top priorities from the regulatory perspective, which are:
Making sure the right systems are in place;
Ensuring a smooth start to data reporting; and
Being aware of the need for accurate, quality data.
Of course, one of main aims behind transaction reporting is to aid the regulators in detecting and preventing market abuse. Yet this aim all depends on the quality of the data received and how well is can be analysed. As an industry, I believe this can best be achieved by firms adopting the same open approach to communicating with the regulators as they are demonstrating with us.
Drivers of change
As mentioned in my pre-event round-up, I also served as co-chair on the day alongside Morten Lindeman, CTO of Infront, as we introduced the key themes and topics which then were explored in more depth during the day’s varied line-up of panels. In particular, I believe that it was the first time a Nordic FIX event had included a panel dedicated to exploring the issues around clearing. As the panel’s moderator, I took the opportunity to ask the audience if they were in fact ready for the start of MiFID II – and everybody said yes. However, when I also asked whether clearing fees are too low, the majority answer was no.
This is a key issue for CCP’s, which have already dropped clearing fees from 60 cents per trade to one cent per trade and are now not making much money as a result. In addition, three of the CCPs present were competing on interoperability. Reading between the lines, I believe this ultimately means that something will have to give. The current situation is simply not sustainable – and there will most likely be changes to remedy this.
Direction of travel
The panel on changes in OTC trading also stood out as being particularly relevant. I was encouraged to learn that everyone seemed to be on the same page in acknowledging the need to move towards a more hybrid approach to trading – and that firms are now finally heading in the right direction. A further very important and timely panel took a detailed look at surveillance practices, which of course is one of the key elements of both MAR and MiFID II. Ultimately their aim is to increase investor and market transparency, while aiming to prevent further market abuse – which we must recognise as being vital to protecting the future and reputation of our industry as a whole.
And finally, the panel exploring the role of AI and machine learning is also worthy of note as there was standing room only, despite being the last panel of the day. It’s particularly interesting that AI can cover such a range of business areas, from improving trading strategies to automating processes and improving work flows. In fact, the relevance and quality of the discussion on each of this year’s panels was outstanding, which I believe is the result of the programme having been directly formulated by senior representatives from across the Nordic region. Of course the event also offered an invaluable opportunity for the industry in the region to come together, with the social and networking side as important as always. Having attracted the highest attendance since this event started eight years ago, I would also say it was one of the best I have been to – and I will certainly be looking forward to its return in 2018.