Europe Gets Tough on ‘Research’ Unbundling SYSTEMATIC INTERNALIZER RANKS SWELL, PRE-MIFID II Aussie Regulator Modernizes Statistics Data Collection THE TWISTS AND TURNS OF SECURE MESSAGING Will Bloomberg’s Cut-Price Chat Tool Stave Off or Sink Symphony? waterstechnology.com November 2017 smartstreamrdu.com Simplifying Reference Data. Together. Established as an industry utility based on the principle of market commonality, collaboration and contribution, The SmartStream Reference Data Utility (RDU) delivers a cost efficient approach to realize the truth of the data contained within the industry with guaranteed results. Managing data holistically across legal entity, instrument and corporate action data, this shared service model promotes fixes to data processing across the instrument lifecycle and the events that originate and change data. Join the revolution, contact us today: [email protected] Editor Max Bowie Tel: +1 646 490 3966 [email protected] Deputy Editor Jamie Hyman Tel: +44 (0) 207 316 9270 [email protected] European Reporter Joanne Faulkner Tel: +44 (0) 20 7316 9338 [email protected] Asia Staff Reporter Wei-Shen Wong Tel: +852 3411 4758 [email protected] Publisher Katie Palisoul Tel: +44 (0)20 7316 9782 [email protected] Global Commercial Director Colin Minnihan Tel: +1 646 755 7253 [email protected] Business Development Executive Arnaud Morell-Coll Tel: +1 646 736 1887 [email protected] Business Development Executive Tom Riley Tel: +44 (0) 20 7316 9780 The Risks of Over-Optimism, [email protected] Group Publishing Director Lee Hartt From Mifi d to Messsaging Head of Editorial Operations Elina Patler Subeditor Brett Gamston Commercial Editorial Manager Stuart Willes a disclaimer: Nothing here should be construed as a Senior Marketing Executive Louise Sheppey Tel: +44 (0) 20 7316 9476 To begin, recommendation to buy our magazine, lest regulators [email protected] tell me to unbundle it and give it away for free—as with anything deemed broker research InfoPro Digital under Mifi d II, causing some banks to add disclaimers to research-like notes emphasiz- 55 Broad Street 22nd Floor ing that they are not, in fact, research, no matter how closely they resemble it. Think that’s New York, NY 10004, USA Tel: +1 646 736 1888 a stretch? So do several domestic regulators, who are warning banks not to assume that these types of broker content won’t be subject to the same rules, reports Risk.net’s Chris InfoPro Digital Haymarket House, 28–29 Haymarket Davis. Basically, if it walks like research and quacks like research… well, you get the idea. London SW1Y 4RX, United Kingdom Tel: +44 (0)20 7316 9000 However, in reality, “you get the idea” isn’t good enough guidance—especially when dealing with the complexities of new regulatory frameworks. For instance, there is still a InfoPro Digital 14th Floor (Unit 1401-3), Devon House, Taikoo Place huge lack of clarity around rules governing systematic internalizers under Mifi d II, market 979 King’s Road Quarry Bay, Hong Kong Tel: +852 3411 4888 participants tell Jamie Hyman, especially around trade reporting obligations. If it seems like we write about regulation all the time, that’s hardly surprising. Not only Subscription Sales UK: Claudio de Oliveira are regulators worldwide undergoing massive reform; each individual initiative encom- Tel: +44 (0)20 7316 9271 passes a multitude of nuances, and complying with each new regulatory framework is [email protected] US: Kemuel Ramos a mammoth undertaking involving many different aspects of compliance with lengthy Tel: +1 646 736 1839 [email protected] checklists of new rules—some of which are well-known, while other less prominent com- ponents may take a back seat until those subject to the rules get around to deciphering InfoPro Digital Customer Services E-mail: [email protected] their implications and often push back against well-intentioned but now-unreasonable Tel (UK): +44 (0)1858 438800 Tel (US): +1 212 776 8075 timeframes. For example, the Australian Prudential Regulatory Authority has delayed the Tel (Asia): +852 3411 4828 implementation of an initiative to overhaul how it collects fi nancial and economic statistics from banks after industry feedback that its timeframes were too aggressive. Arguably also guilty of starting out with overly aggressive ambitions—or perhaps of not correcting overly ambitious assumptions that others attributed to it—is Symphony Communication Services. Initially envisaged by its backers as a tool to displace (or per- haps just bully) Bloomberg, the challenge of gaining traction—even for an initiative so widely backed by big industry players—and functionality to serve as a viable inter-fi rm messaging platform (let alone, as a data platform) to rival even part of the Bloomberg To receive Inside Inside Data Data Management Management empire has left some initial supporters disillusioned. All this as Bloomberg releases its magazine everyevery month month you you must must subscribe to to Buy-Side Inside Market Technology Data cut-price, unbundled IB Chat service—perhaps its fi rst defensive salvo, or perhaps the online, Sell-SideInside Reference Technology Data online online or fi rst nail in Symphony’s coffi n? That said, those in it for the long haul may live to see orone one of ourof our multi-brand multi-brand subscription subscription Symphony become the fi nancial “cloud” that content providers other than Bloomberg options. ForFor more more information information and subscriptionsubscription details, details, visit visit view as their best channel to market—a consolidated “community” of content and tools. waterstechnology.com/subscribe But until then, Bloomberg still has the upper hand. Max Bowie Inside Data Management (ISSN 2514-0574) is published Editor monthly (12 times a year) by Infopro Digital Risk Limited. Printed in the UK by DG3. Published by Infopro Digital Risk Limited. Copyright Infopro Digital Risk Limited (IP), 2017. All rights reserved. No part of this publication may be reproduced, stored in or introduced into any retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the copyright owners. waterstechnology.com November 2017 1 1 Editor’s Letter 14 4 News Bloomberg’s Chat Gambit: The Feint 8 New Perspectives Before a Knockout? 14 Bloomberg’s Chat Gambit: The Feint By Joanne Faulkner Before a Knockout? Is Bloomberg’s decision to introduce a cut-price version of its Instant Bloomberg messaging a sign that the data giant is rattled by Symphony? Does the move refl ect genuine concern by Bloomberg, or is it simply how the vendor is adapting to the broader evolution of the messaging space? By Joanne Faulkner 18 EU Gets Tough on ‘Research’ Unbundling Mifi d II will force sell-side fi rms to unbundle research fees from dealing commissions they charge to buy-side clients. The banks claim their front-offi ce notes meet the criteria of being a minor non-monetary benefi t, but EU watchdogs aren’t convinced. By Samuel Wilkes 18 22 EU Gets Tough Out with the Old: on ‘Research’ Australia’s APRA Unbundling Takes Aim at EFS Data By Samuel Wilkes By Wei-Shen Wong 2 November 2017 waterstechnology.com November 2017 22 Out with the Old: Australia’s APRA Takes Aim at EFS Data 26 Systematic Internalizer The Australian Prudential Regulation Ranks Swell Ahead of Authority is overhauling its core regulatory Mifi d II reporting requirements, which includes By Jamie Hyman the modernization of the Economic and Financial Statistics data submissions required from Australian banks and various other fi nancial institutions. Wei- Shen Wong reports on the challenges created by the reviewed submissions. 26 Systematic Internalizer Ranks Swell Ahead of Mifi d II While buy- and sell-side fi rms grapple with the reporting obligations imposed on systematic internalizers under Mifi d II, the number of registered SIs keeps growing. Jamie Hyman looks at why more fi rms are 30 opting in to the designation ahead of the Will Eonia Sink regulation’s January 3 deadline. or Swim in Hunt 30 Will Eonia Sink or Swim in Hunt for for Euribor Replacement? Euribor Replacement? By Chris Davis The European Central Bank has intervened to rescue stalling benchmark reform and fi nd a new risk-free rate for swaps. But a key contender, a strengthened Eonia, has suffered from dwindling transaction volumes in recent years, and the ECB’s new overnight rate is widely regarded as the top contender. But it may take a long time for market participants to develop confi dence in a new reference rate. By Chris Davis 34 Human Capital waterstechnology.com For more information and readers’ feedback please join the discussion waterstechnology.com November 2017 3 News MT Newswires Expands Canadian News Services Bethesda, MD-based news provider MT micro-cap or Pink Canadian exchange-traded funds. “We do Newswires has rolled out a Canada-focused Sheet stocks,” he quite a lot of ETF coverage in the US, and we news feed to enhance its coverage of Cana- says. “Based on that are expanding our Canadian ETF coverage dian companies listed on the TMX-operated appetite, we tried to in response to demand… from the invest- TSX Venture Exchange. figure out how we ment community, and because we have Dubbed the Venture 50 Wire, the service could serve that been contacted by ETF issuers and asset is designed to