Will Data Disaggregation Rules Deliver on Cost-Saving Aims? BAKING A DISTRIBUTED LEDGER LAYER CAKE IN A DATA OVEN Firms Drag Heels on Research Rulebook Rewrite EUROPE’S NEW REGULATORY FRAMEWORK A Multi-Level View of the Aspects of MiFID II Affecting Data Management waterstechnology.com August 2017 A big thank you for making us # WINNERS 1 Best Overall Data/Service Provider Best Corporate Actions Provider (8 Years Running) Most Innovative Regulatory Solution SIX Financial Information is honored to be No.1 in three award categories at the Inside Reference Data Awards 2017. We are extremely proud to be voted Best Overall Data/Service Provider, reinforcing our EQOOKVOGPV VQ UWRRQTVKPI VJG ƂPCPEKCN community with innovative data and regulatory services. Thank you to all the Waters Technology readers and judges who voted for us! YYYUKZƂPCPEKCNKPHQTOCVKQPEQO 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 Michael Balzano Tel: +1 646 755 7255 [email protected] Business Development Executive Tom Riley Tel: +44 (0) 20 7316 9780 By Accident or Design [email protected] Group Publishing Director Lee Hartt Head of Editorial Operations Elina Patler four of the fi ve feature articles in this issue Subeditor Brett Gamston Commercial Editorial Manager Stuart Willes The fact that focus on MiFID II, which becomes law at the start of 2018, wasn’t planned; it just worked out that way, based on the topics that Senior Marketing Executive Louise Sheppey Tel: +44 (0) 20 7316 9476 are front-of-mind for data professionals right now—hardly surprising, given that with [email protected] less than fi ve months to go until fi rms must be compliant with the new law, there is still InfoPro Digital much to be done. 55 Broad Street 22nd Floor This is true for just about every aspect of MiFID II pertaining to data management. New York, NY 10004, USA Tel: +1 646 736 1888 For example, Joanne Faulkner reports, when it comes to exchange data, which MiFID II forces exchanges to “disaggregate” as separate datasets so consumers can pay InfoPro Digital Haymarket House, 28–29 Haymarket for only the data that they need, user fi rms are so overwhelmed (a) by other MiFID II London SW1Y 4RX, United Kingdom Tel: +44 (0)20 7316 9000 compliance projects, and (b) the complexity of disaggregated fee models that they have asked exchanges to continue the status quo to avoid further disruption. InfoPro Digital 14th Floor (Unit 1401-3), Devon House, Taikoo Place One of those other projects cited as a distraction from strategic decisions is that 979 King’s Road Quarry Bay, Hong Kong Tel: +852 3411 4888 payment for broker research must be transparent and separate from trading com- missions, to prevent fi rms directing client fl ow to brokers as payment for research, Subscription Sales UK: Claudio de Oliveira when that broker may not offer the best execution. Many buy-side fi rms plan to Tel: +44 (0)20 7316 9271 fi nalize their research budgets soon, but have yet to receive fi rm prices for research [email protected] US: Kemuel Ramos from their brokers. And in a recent study, one-third still had no idea how they will Tel: +1 646 736 1839 [email protected] pay for research. Another pressing compliance concern is that to meet MiFID II’s trade reporting InfoPro Digital Customer Services E-mail: [email protected] requirements, fi rms must decide on an Approved Reporting Mechanism (ARM) and Tel (UK): +44 (0)1858 438800 Tel (US): +1 212 776 8075 Approved Publication Arrangement (APA). However, as Jamie Hyman reports, some Tel (Asia): +852 3411 4828 say that up to three-quarters of fi rms have yet to make (and test) their choices. In fact, some may be so late that they are not allowed by law to trade from Jan. 3. All these issues present even bigger challenges for Asia-based fi rms that deal with European counterparties or have a presence in Europe, and which are subject to MiFID, but may be unsure to what extent, causing some to integrate MiFID II-based approaches across their business, while others isolate any regional businesses that might be affected, reports Wei-Shen Wong. The levels of tardiness beg important questions: Are such last-minute To receive Inside Inside Data Data Management Management preparations by accident or design—i.e., are fi rms merely under-resourced and magazine everyevery month month you you must must subscribe to to Buy-Side Inside Market Technology Data overwhelmed, or are they deliberately dragging their heels hoping to force pan- online, Sell-SideInside Reference Technology Data online online or European regulator the European Securities and Markets Authority to cave in and orone one of ourof our multi-brand multi-brand subscription subscription delay MiFID II yet again? The other question is how investors will feel if they discover options. ForFor more more information information and subscriptionsubscription details, details, visit visit that their broker or asset manager is among those either so unprepared or playing waterstechnology.com/subscribe such a dangerous gambit. 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 August 2017 1 1 Editor’s Letter 14 4 News Will MiFID II’s Data Disaggregation Deliver on 8 New Perspectives Cost Control Promises? 14 Will MiFID II’s Data Disaggregation By Joanne Faulkner Deliver on Cost Controls Promises? MiFID II’s data disaggregation requirements aim to reduce data costs by forcing marketplaces to unbundle datasets and sell consumers only the specifi c data they need. But this could make buying and selling data more complicated, and introduce new cost burdens, as Joanne Faulkner discovers. 18 Firms Drag Heels on MiFID II Research Rulebook Rewrite MiFID II’s ban on broker-subsidized free research will be a challenge for sell-side fi rms that must decide how how to price research so as not to lose customers who might direct trading elsewhere, without appearing to incentivize clients to trade. By Kirsten Hyde 18 22 Firms Drag Asia’s MiFID II Heels on MiFID II Compliance Countdown Research Rulebook By Wei-Shen Wong Rewrite By Kirsten Hyde 2 August 2017 waterstechnology.com August 2017 22 Asia’s MiFID II Compliance Countdown The countdown to MiFID II is starting to 30 Baking a Distributed sound like the ominous ticking of a time Ledger Layer Cake in bomb. Many details of the regulation have a Data Oven been available for some time, yet as the By Tim Bourgaize clock ticks down, questions still remain Murray over interpretation. Wei-Shen Wong fi nds out whether Asian fi rms have defused the danger or are bracing for an explosion. 26 A Costly Race to MiFID II Reporting Compliance Trade reporting and publication mechanisms are a key part of the new MiFID II legislation. So why are alarming numbers of fi rms yet to choose their providers? With a last-gasp sprint on the cards in a crowded fi eld of participants, Jamie Hyman investigates whether some 26 have left it too late. A Costly Race 30 Baking a Distributed Ledger Layer to MiFID II Cake in a Data Oven Reporting Compliance A great deal of distributed ledgers’ By Jamie potential lay in their shared data layer. Yet Hyman a curious facet of ledgers’ rapid rise is that the conversation and investment in this space has moved mostly apart from data management and data managers. Tim Bourgaize Murray explores the reasons why, and the possible opportunities as blockchain and smart contracts gain wider adoption. 34 Human Capital waterstechnology.com For more information and readers’ feedback please join the discussion waterstechnology.com August 2017 3 News MDSL to Continue Data Focus Following Sale, Merger Californian private equity firm Sumeru Equity and more general IT that scale take a lot of resources.” Partners (SEP) has acquired UK-based data management on the MDSL also wants to capitalize on further cost management software vendor MDSL same platform, giving opportunities in the telecoms expense and merged it with telecoms services clients a full picture of management area, where the vendor has provider Telesoft—a former competitor to the total cost of owner- been “consistently picking up a lot of new MDSL’s Telecom Expense Manager tool— ship of their IT and business,” Mendoza says. However, this which SEP acquired less than a year ago. technology, he adds. made it hard to scale fast enough to take Following the acquisition, SEP has This is not a big stretch advantage of the new business while also Ben Mendoza, MDSL combined the companies under the MDSL from the company’s looking after its more than 100 existing finan- brand, and appointed Telesoft chief execu- roots, Mendoza says.