The Fixed Income Leaders Summit has published the report “On the precipice: Are you ready for MiFID II”, following a survey it conducted of 100 heads of European fixed income in Q3 2017. The report comes as the buy-side is in the midst of preparations for the legislation before the looming 3^rd January implementation deadline. In addition to the impact of MiFID II, the report focuses on the liquidity challenge as well as the impact of “hard Brexit” on London’s financial hub status.

The findings of the report have been published ahead of the Fixed Income Leaders Summit in Amsterdam on 8^th and 9^th November, where Rt Hon Nicky Morgan MP will deliver a Brexit keynote to over 700 attendees and over 350 buy-side heads of fixed income.

The research highlights three central themes posing the biggest challenge to fixed income trading desks:

MiFID II implementation concerns spread across multiple facets

Forty-five percent of respondents are still struggling with MiFID II compliance despite the January implementation deadline now upon them. As the date approaches, 28% of respondents were most concerned with compliance with post-trade transparency requirements including trade and transaction reporting. However, research unbundling (26%), pre-trade transparency (25%) and systematic internalisers (21%) also gained near-equal share of concern among fixed income heads suggesting that MiFID II is causing headaches across the board.

The liquidity question remains and technology is still the answer

Sourcing liquidity emerged as the biggest challenge facing fixed income leaders with 55% of respondents listing it as a top three challenge for their trading desk, followed by sourcing and paying for reliable data (52%) and increasing on-the-desk technology (51%). Given these results, there is little surprise that 54% see implementing technology as the biggest priority for fixed income trading desks. The need to source liquidity is also leading to increased buy-side collaboration with 78% of respondents stating that they would be willing to partner with other desks.

London’s status as financial hub to diminish in case of “hard Brexit”

Negotiations surrounding Britain’s exit from the European Union continue to rage on in Brussels. Whether Brexit will result in the displacement of London’s status as Europe’s financial hub is the cause of much debate. In the case of a hard Brexit (no deal), nearly 70% of European heads of fixed income believe that London’s status as Europe’s financial hub will significantly diminish.

Oliver Kirkbright, Editorial Director for the Fixed Income Leaders Summit, commented: “With the MiFID II implementation deadline upon us, the report paints a picture of a race against time with firms struggling with their preparations for January 2018. In addition, on-the-desk challenges such as sourcing liquidity, data and technology continue to be a high priority for heads of fixed income. Given the strong belief that hard Brexit will impact London’s status as Europe’s financial hub, it is excellent that November’s Fixed Income Leaders Summit in Amsterdam will welcome Nicky Morgan MP to the stage for a keynote Brexit speech.”

The Fixed Income Leaders Summit, hosted by World Wide Business Research, will take place in Amsterdam in the iconic former commodity exchange, the Beurs Van Berlage. On the 8th and 9th November, the event will play host to over 700 attendees and over 350 buy-side heads of fixed income, representing more than 420 companies from across the full fixed income value chain.