Solving the MiFID II challenge requires a significant amount of human resources and technology investment that, if solved on an individual basis could prove very costly with only limited, if any, competitive advantage.  Project Sentinel’s collaborative approach enables market participants to pool their resources by investing in a standards-based, strategic MiFID II compliant technology solution that will automate the regulatory business processes for the front office; delivering that functionality with maximum efficiency and minimum commercial risk.  

The group continues to focus upon:

·       Reducing costs and risks through mutualisation of analysis, regulatory interpretation and implementation
·       Using economies of scale to create a competitive, market-leading, best-in-class solution
·       Ensuring dedicated, ring-fenced resources working for the project
·       Up-to-date reference data model and regulatory consensus

The banks have now defined a set of MiFID II compliant workflows.  These articulate the detailed changes required for the trading-flow between the client, the sales person and the trader.  There are 2,700 permutations of interaction type / client types / trading models / venue types and instruments – these have been combined into 7 key workflows that need significant change.  Alongside these flows, the banks have constructed a logical architecture that details the various components required and their interfaces with a typical bank infrastructure and finally a specifications document from which vendors will be able to understand the functional and non-functional requirements.  In addition, the consortium has updated the reference data model defined in Phase 1 to reflect further details issued by ESMA and also added the required reference data to support EMIR.  This last piece was to demonstrate the flexibility and potential of the model to encompass other regulations.

All of the deliverables in Phases 1 and 2 were created in two blocks of seven weeks – using dedicated resource from Etrading Software and key personnel from the member banks.  This collaboration has meant the banks can share the direct cost of ETS and the indirect one of additional internal resources to support MiFID II programmes. 

Stephane Malrait, Global Head of eCommerce for Financial Markets at ING Bank N.V. said: “Sentinel is a great collaboration project between banks to document the regulatory requirement around MIFID II and propose a technical implementation solution to reduce cost for its participants. ING participation helped on the creation of a workflow solution in line with ING commitment toward innovation for its client base.”

Sentinel is now focused on assessing possible vendors to deliver the solution.  Once the vendor assessment is complete, the banks will decide upon the final technical architecture and the implementation streams for the various components.  This will also include consideration of the buy versus build options and the interfaces into the banks’ existing trading platforms – ensuring that, wherever possible, standards and commoditized technologies are utilised.

Sassan Danesh, Managing Partner, Etrading Software said: “The rapid completion of the latest Sentinel milestone, on time and on budget, is testimony to the desire of Sentinel banks to provide best-in-class services to their client base in a MiFID II environment. We are delighted to facilitate this important initiative to mutualise the technology costs of MiFID II compliance.”

Etrading Software continues to act as PMO to facilitate the collaboration amongst the Project Sentinel banks, applying its experience of etrading technology and managing bank consortia.