Living with MiFID II: Examining Organised Trading Facilities

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An Assessment of the Advantages & Disadvantages for Banks and Buyside Firms

The second iteration of the EU’s Markets in Financial Instruments Directive extended the scope of MiFID I to include new pre- and post-trade transparency requirements for investment firms trading in non-equities instruments and products, specifically bonds and swaps, as well as for a wide variety of other types of derivatives instruments and products. To facilitate these transparency mandates, MiFID II introduced a new type of trading venue designation that investment firms could use when trading in those instruments called an Organised Trading Facility.

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GreySpark Partners presents a report exploring the advantages and disadvantages in 2018 associated with the use of OTFs by asset managers, hedge funds, institutional investors, investment banks and non-bank market-makers. In doing so, this report quantifies the number of OTFs operating within the EU in Q1 2018, assessing the breadth and depth of instruments and products coverage that they offer in an effort to help market participants better understand how they can utilise OTFs based on the characteristics of their business and trading models for non-equities trading.

As such, this report can be used by market participants to better understand the breadth and depth of bonds, derivatives and swaps coverage provided by those OTFs operating in Q1 2018 and ahead of the Aug. 1, 2018 publication by ESMA of the first-ever data pertaining to the total number and volume of non-equities transactions executed in the EU over the Jan. 3, 2018 to June 30, 2018 period.

Published on: 11 Apr, 2018

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Description

Living with MiFID II: Examining Organised Trading Facilities – Table of Contents

  • 1.0 The Vital Statistics of Organised Trading Facilities
    • 1.1 Operational & Regulatory Obligations
    • 1.2 Business Model Challenges & Advantages
  • 2.0 Assessing the Depth of Instrument & Products Coverage
    • 2.1 Authorisation & Registration Delays
    • 2.2 Mapping the Organised Trading Facility Landscape in 2018
    • 2.3 Observed Depth of Organised Trading Facility Coverage by Instrument & Product Type
    • 2.4 Analysis of Observed Depth of Instrument & Products Coverage
  • 3.0 Assessing the Advantages & Disadvantages of OTFs vs. SIs
    • 3.1 Organised Trading Facilities vs. Systematic Internalisers
    • 3.2 Trading on Systematic Internalisers: Bonds, Futures & Swaps
    • 3.3 Organised Trading Facilities: Advantages & Disadvantages for Buyside & Sellside Counterparties
    • 3.4 Assessing the Technology Implications of Operating an OTF
  • 4.0 Appendices
    • 4.1 A Comparison of MiFID II Trading Venues
    • 4.2 Glossary of Terms
    • 4.3 Table of Figures