Doesn’t ESMA time fly!

  • Anne Plested, Business Solutions Consultant at Fidessa

  • 08.10.2015 01:00 am
  • MiFID II /MiFIR , Anne heads up the regulation change programme for Fidessa in Europe. Since joining the firm in 2009 she has played a significant role in the establishment of the Fidessa Regulation Team, monitoring and evaluating the regulatory environment and working on the impact analysis of MiFID II and other major EU regulatory changes running in parallel. Anne is a frequent contributor to a number of industry groups discussing MiFID II, regulation, best practice and post-trade data standards. She is a Member of the Steering Committee for the FIX Trading Community's MMT (Market Model Typology) initiative as well as being a member of, and regular contributor to, their EMEA Regulatory Sub-Committee. In May 2014 Anne was appointed by ESMA as an external stakeholder representative on the Consultative Working Group that supports their Market Data Reporting Working Group. With more than 20 years' experience of the financial markets in London, Anne has previously worked as front-office projects manager, specialising in trading systems, for the retail and institutional divisions of a large private client investment management firm. She has also been involved in numerous projects for a major investment bank and a number of other City firms.

Looking at the latest changes regarding accuracy of business clocks, now reincarnated as RTS 25, I noticed a number of interesting points in the text. Most importantly, the absence of the usual clause “…applies from 3rd January 2017″, with just the generic phrase stating that the rules will “enter into force on the twentieth day following that of its publication”. Is this an accidental omission, I wonder? If not, given that the European Commission has three months to endorse the text, which could be delayed by one or two months if the European Parliament and Council oppose it, there’s a possibility we could see business clock synchronisation in force some time in Q1 2016.

Also, ESMA sets the overall context for clock synchronisation squarely in the camp of market abuse detection, and in particular cross-venue monitoring and the use of post-trade data reports. The accuracy and granularity of timestamps applies only to trading venues and their members and participants, which suggests that buy-sides and non-members are potentially out of scope.

Thankfully, the infeasible nanosecond is out. The new maximum divergence from UTC mandated by ESMA is to a degree of 100 microseconds, or one millisecond depending on a venue’s gateway-to-gateway latency, and a more acceptable one second for manual or voice systems. The new corresponding timestamp granularity on reportable events for those lower latency matching engines is set at 1 microsecond or better.

So whilst the rules themselves look less onerous than many feared, they may well enter into force earlier than most of us expected!


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