OTC Post-trade Transparency Service
November, investment firms will have to publish volume and time of all shares
admitted to trading within the European Economic Area if the trade is executed
outside a regulated market or a multilateral trading facility (MTF). The data
is to be checked and each transaction is to be published separately and only
once. Publication is generally required within three minutes after execution.
With its OTC Post-trade Transparency Service, Deutsche Börse is ready to offer
its customers a fully compliant MiFID tool, with such extras as block trade delay,
reporting on behalf of third parties, marketing functionality, clearing and
settlement and individual end-of day compliance reporting.
Publication via CEF® data feed
This service features reporting of OTC
trades via the Xetra® Values interface and the Xetra® GUI in combination with
real-time publication via the CEF® data feed. As a general rule, this
guarantees market publication within milliseconds of transaction entry. The
large number of information providers connected to CEF® ensures widespread
publication of the relevant data.
Assuring data quality
The Deutsche Börse OTC Post-trade
Transparency Service includes data quality assurance. Price and volume are
checked for plausibility. If a questionable set of data is detected, it will be
marked accordingly and sent to the customer for verification while it will be
published at the same time to adhere to MiFID regulation. Any flagged trade
data will subsequently either be confirmed or corrected by the reporting party.
Furthermore, all trade reports transmitted to Deutsche Börse are compared to
the current list of instruments covered by MiFID. Instruments which are not relevant
will not be published, reducing the need to identify instruments subject to
MiFID at the customer-side.
Entrance on behalf of third parties
Xetra® members can choose to enter trades
on behalf of third parties for investment firms without a Xetra® membership.
This feature meets the demands of a number of Xetra® members.
Deutsche Börse produces end-of-day
compliance reports for each reporting client on a daily basis. Investment firms
can use these reports to prove MiFID compliance to regulatory authorities.
Deutsche Börse also provides performance reports as required under the
regulation of the FSA in the UK.
Block trade delay
MiFID allows a delay in publishing large
transactions which have been executed for a client against the investment firms’
own book. A study conducted in 2006 by Frankfurt-based E-finance Lab, a
financial market research institute, showed that 37.8 percent of the polled
investment firms were interested in such block trade delay functionality but
many decide against it because of the high costs involved. By offering a fully
automated block trade delay service to a large user base, Deutsche Börse is
able to achieve economies of scale, making the
service cost efficient on a per user basis.
Flexible use of trading venue
Generally, investment firms can decide on
a trade by trade basis whether to publish a transaction under their own name or
to use the acronyms ‘OTC’ or ‘SI’ as execution venue-ID. As Deutsche Börse
delivers market data to almost 400 data vendors via CEF®, this function can be
utilised as an efficient marketing tool.
The MiFID service is based on Xetra® OTC
functionality which supports OTC clearing and settlement for a sub-group of instruments. That
is why a combination of OTC trade reporting, clearing and settlement is
possible. Clients using the service will only have to submit the relevant data
once, eliminating redundant data entry into different systems on their own
Deutsche Börse already disseminates almost the complete
view of the German equity market via its real-time data feed CEF®. Adding OTC
equity data on CEF® further supports easy consolidation for all data vendors.
Each vendor connected to CEF® has access to data simultaneously. OTC data
dissemination via CEF® is made available via the identical administrative and technical
infrastructure as all other Deutsche Börse market data sets.
The Deutsche Börse OTC Post-trade Transparency Service
is a convenient path towards MiFID, requiring minimal customer effort and